Intuit Annual Report 2012

FY2012 Annual Report · Intuit
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intugroup.co.uk

Intu Properties plc 
40 Broadway, London SW1H 0BT

Telling our brand new story
Annual Report 2012

 
 
 
 
 
For further information go online
intugroup.co.uk

Overview
01   Creating great retail experiences
08   2012 Highlights
10   Chairman’s statement
13  Governance and remuneration overview

Business model and strategy
16   Business model*
18   Strategy*
20   Key performance indicators*
22  Our people
26   Key risks and uncertainties*
28   Top properties

Business review
32   Market review*
34   Valuations*
36   Operating review*

Financial review
44   Financial review*

Corporate responsibility
52   Corporate responsibility*

Governance
60   Board of Directors
62   Executive management
63  Chairman’s introduction
64   Corporate governance report
74   Directors’ remuneration report
89   Directors’ report*
92   Statement of Directors’ responsibilities

Accounts
94  
Independent auditors’ report
95   Consolidated income statement
96   Consolidated statement of comprehensive income
97   Balance sheets
98   Statements of changes in equity
101   Statements of cash flows
102   Notes to the accounts

Other information
140   Investment and development property
142   Financial covenants
143   Underlying profit statement
144   EPRA performance measures
146   Financial record
147   Management structure and advisers
148   Glossary
150   Dividends
151   Shareholder information

 *  These sections of the report include items required to be stated 
in accordance with Section 417 of the Companies Act 2006 – 
Business Review.

On 15 February 2013 the Company changed its name from Capital Shopping Centres 
Group PLC to Intu Properties plc. Throughout this document the Company is referred  
to as Intu Properties plc.

Passionate about providing 
people with their perfect 
shopping experience, we  
help retailers flourish. 
And it’s this that powers  
our business, driving our  
long-term success. 

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01

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
We own some of the very best centres  
in the strongest locations right across  
the country. Offering easy access to great 
places for shopping and socialising to more 
people than anyone else, we attract over 
320 million customer visits each year.

intu Braehead
Glasgow

Arndale Centre
Manchester

intu Trafford Centre
Manchester

Cribbs Causeway
Bristol

St David’s
Cardiff

intu Eldon Square 
Newcastle upon Tyne

intu Metrocentre
Gateshead

intu Potteries
Stoke-on-Trent

intu Victoria Centre
Nottingham

intu Broadmarsh 
Nottingham

intu Chapelfield 
Norwich

intu Watford

intu Uxbridge

intu Lakeside
Thurrock

intu Bromley

02

Intu Properties plc 2012 Annual ReportThere was a time when our business was 
fairly straightforward. We created buildings 
and filled them with shops. We kept  
them clean, comfortable and attractive.  
We marketed spaces, collected rents  
and encouraged people to visit us.

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03

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
But things change. These days people 
expect far more from their shopping 
centres, and the journey they take in making 
a purchase is more complex than ever.  
So, building on what we’ve always  
done well, we’re committed to making  
our centres even better.

04

Intu Properties plc 2012 Annual ReportAnd how are we doing this? Certainly by 
continuing to provide the best places to 
meet, eat, drink and be sociable. And by 
continuing to offer access to every one  
of the UK’s top 20 retailers and the iconic 
global brands our customers love. 

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05

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
But most important, through our new 
brand intu, we will create uniquely 
compelling experiences, surprising and 
delighting our customers. This means 
providing both consistently outstanding 
service and the technology people need  
to get in touch and stay connected.

06

Intu Properties plc 2012 Annual ReportWith all of our staff fully energised by this 
vision, we will attract more customers, who 
will want to come back again and again.  
This will help create value for our  
retailers, our communities, our investors 
and ourselves.

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07

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Overview

2012 Highlights

Operational highlights

Out-performed in challenging market background

•	property valuations increased 0.6 per cent, comparing favourably with 

benchmark index which fell 5.8 per cent

•	high occupancy at 96 per cent; successful relettings partly offsetting impact 

96% Occupancy

of tenant failures which represented 6 per cent of rent roll 

•	signed 169 long-term leases for £44 million new annual rent at an average  

7 per cent above previous passing rent and in line with valuation assumptions

•	underlying earnings per share 16.1 pence (2011 – 16.5 pence) 

Progressed active management and major extension projects 

•	pipeline now amounts to £1 billion programme over 10 years

•	represents some 2,300,000 sq. ft. of new retail, restaurants and leisure 

of which 650,000 sq. ft. consented

•	acquired strategic sites at Metrocentre, Cribbs Causeway, Braehead and 

Manchester Arndale

Improved financial flexibility 

•	£300 million 2.5 per cent convertible bonds due 2018 issued in October

•	cash and committed facilities of £563 million at 31 December 2012

169 new long-term leases signed

£1bn 10-year pipeline of projects

Launched nationwide consumer-facing brand and  
transformed digital proposition

•	announced January 2013, corporate name change effective 18 February 2013, 

consumer launch in May 2013 

320 million customer visits

•	installing high capacity fibre optic networks enabling free WiFi and other 

digital services from March 2013

•	transactional website from spring 2013 

08

Intu Properties plc 2012 Annual ReportFinancial highlights1

Net rental income (£m)

Underlying earnings (£m)

Property revaluation surplus (£m)

Profit for the year (£m)

Underlying EPS (pence)

Dividend per share (pence) 

Market value of investment properties (£m)

Net external debt (£m)

NAV per share (diluted, adjusted) (pence)

Debt to asset ratio (per cent)

Twelve months ended 31 December

Net rental income

2012

363

138

41

159

16.1

15.0

2012

7,073

3,504

392

49.5

20112

364

139

63

34

16.5

15.0

As at 31 December

2011

6,960

3,374

391

48.5

2012

2011

2010

20093

£363m

£364m

£277m

£267m

Underlying EPS

2012

2011

2010

20093

Dividend per share

2012

2011

2010

20093

NAV per share

2012

2011

2010

20093

16.1p

16.5p

15.4p

15.1p

15.0p

15.0p

15.0p

15.0p

392p

391p

390p

339p

1 Please refer to glossary for definition of terms.
2 2011 earnings data includes Trafford Centre results for the 11 months from its acquisition.
3  2009 figures have been re-stated to remove the impact of the Capco business following the 

demerger in May 2010.

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09

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Overview continued

Chairman’s statement
We are now seeing tremendous 
benefits from focusing exclusively  
on prime regional shopping centres

2012 has been another year of 
considerable progress for the Group. 
It is still under three years since we 
completed the demerger of Capital 
& Counties and two years since the 
completion of the Trafford Centre 
transaction, which is now fully 
integrated into the overall business. 
Both of these moves have been very 
positive for shareholders and we 
are now seeing tremendous benefits 
from focusing exclusively on prime 
regional shopping centres.

We are by some margin the largest owner of regional shopping 
centres in the UK with ten of the UK’s top 25 centres and the 
largest landlord to many retailers. We estimate some 30 million 
unique visitors, around half the UK’s population, enter our 
centres every year.

Shopping habits and technology have of course moved on 
quite a way over the last two years. Much has been written 
about the changing world of retail, with statistics such as half of 
UK internet users now making use of the internet at some stage 
in the shopping process and by mid 2012 over half of fashion 
consumers having used a mobile device to make purchases. 
In our case last year 9 million unique devices accessed our 
shopping centre websites, half of which were mobiles.

Through our focus on the prime centres in the UK, we have in 
our view been a beneficiary of these changes. Consumer activity 
and retailer investment have been focusing increasingly on the 
top centres such as ours. Further, our tenant mix has changed 
positively, with the rise of Apple as a retailer being one of the 
most obvious examples. Generally retailers have performed well 
where they have successfully combined the website and physical 
experience. We have also seen a surge in demand for food and 
beverage outlets as lifestyles have changed.

Patrick Burgess
Chairman

10

Intu Properties plc 2012 Annual Report“ The virtuous circle of improved customer 
experience driven by motivated customer service 
attracting leading retailers is a powerful force.”

But one thing is for sure, as a major landlord in this fast 
changing arena, we have to keep raising our game and 
doing so entails some radical changes throughout the whole 
organisation. It is this comprehensive approach on which the 
management team and your Board have been focused.

As a reflection of our determination to keep the Company at 
the forefront of the industry, in January this year we announced 
the creation of a nationwide consumer facing shopping centre 
brand and the transformation of our digital proposition. I note 
with pleasure that this statement is the first to be issued under 
our new corporate name of Intu Properties plc (‘Intu’), with 
individual centres to add ‘intu’ as a prefix to their name from 
May 2013 onwards.

Prior to this change of name, no obvious link has existed 
between the parent company and the individual centres. 
The centres themselves had no obvious connection between 
each other, which has resulted in considerable disparity in terms 
of how the centres present themselves, in signage, way-finding, 
marketing collateral, websites – the list goes on. We believe 
a single common thread across all our centres is essential for 
the digital world and will also bring huge benefits in terms 
of customer recognition, more effective use of our annual 
marketing budget, national marketing opportunities and an 
opportunity to refresh the physical look and feel of our centres.

A further key part of January’s announcement was a major 
investment in digital infrastructure to provide free WiFi to 
customers through a new fibre-optic network. Taking advantage 
of the changing technology, we are installing this infrastructure 
in a way which ensures direct ownership of the network and 
WiFi technology and is a future-proofed high quality solution.

Our research has indicated a massive opportunity for us to 
deliver more to the consumer and we have also announced the 
launch in spring 2013 of a fashion focused and mobile enabled 
transactional website, further enhancing the experience of our 
digitally connected customers.

Customer service has been a priority for many years. 
The experience of a visitor to a shopping centre of course 
starts long before the visitor actually arrives at a shop and 
our guiding principle has been that every shopper should feel 
better about life after a visit to one of our centres. We intend 
to keep improving through what we have termed our World 
Class Service programme which will ripple right through the 
entire organisation, with the common brand an essential factor 
in the delivery of an upgraded customer experience.

Activities in the year

The initiatives referred to above represent only one element 
of the important activities at the Company over the last 
12 months. Our shopping centres have increased in value 
and shown considerable operating resilience. We have also 
made great strides with our many promising expansion and 
improvement projects, including clearing significant planning 
hurdles. Our plans for the future are outlined in the Operating 
review. We look forward eagerly to the growth opportunities 
ahead of us. 

Directors and staff

I would like to record our thanks to John Abel who is retiring 
from the Board at this year’s AGM. His contribution, backed 
by very long experience in the shopping centre industry, 
has been invaluable. 

We welcome to the Board Adèle Anderson who brings 
accountancy expertise and the judgement derived from her 
breadth of experience in executive and non-executive roles.

I must pay tribute to the immense amount of effort and 
enthusiasm which all the Group’s executives and staff have 
put in to running the business in the year under review. 

Our recent announcement underlines the dynamic and 
engaging culture based on three core values – creative, 
bold and genuine – now reinforced throughout the Group.

11

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Concluding remarks

The Group has delivered a strong performance in 2012, 
with the quality of our assets and teams demonstrated by 
the considerable out-performance of national benchmarks 
against a challenging economic background.

While the major announcement in January of the new 
brand and digital initiatives represented the culmination of a 
significant amount of preparatory work, we are only at the very 
beginning of a new phase in the Company’s life, with our market 
leadership position in the sector providing ample opportunities 
for growth whether organically or by acquisition.

The virtuous circle of improved customer experience driven 
by motivated customer service attracting leading retailers is 
a powerful force.

In this context enhancing footfall, improving dwell time, 
increasing average spend, improving the retail mix and new 
sources of income are all realistic and promising goals.

Patrick Burgess  
Chairman

27 February 2013

Overview continued

Economic contribution and 
Corporate Responsibility (‘CR’)

People are at the heart of our business and our CR projects 
and community partnerships focus on them. Our approach 
targets support, primarily for disadvantaged young people, by 
complementary actions involving centre-based initiatives and 
larger, corporate programmes, the latter increasingly arranged 
to develop and grow over more than a single year reflecting our 
long-term vision. Current partners include Education Business 
Partnerships, The Conservation Volunteers, Outward Bound 
and the Tyneside Cinema.

All our projects promote the direct involvement of Intu team 
members and this approach was celebrated by our achievement 
of the BitC Community Mark in 2010. Only 38 UK organisations 
currently hold the 3 year award and we successfully passed the 
mid-term review during 2012. 

In March 2012 we successfully renewed our Carbon Trust 
Standard accreditation, a measure of our embedded approach 
to energy sustainability and carbon management. Further 
evidence of our success, going well beyond easy rhetoric, 
came when we were ranked as a Green Star in the 2012 round 
of the Global Real Estate Sustainability Benchmark (‘GRESB’).

Dividends

The Directors are recommending a final dividend of 10.0 pence 
per share bringing the amount paid and payable in respect of 
2012 to 15.0 pence, the same as 2011 and covered by the 
underlying earnings per share for 2012 of 16.1 pence.

Following the approval by shareholders at the Annual General 
Meeting on 25 April 2012 of the scrip dividend scheme and its 
successful implementation for the 2012 interim dividend, the 
Board may choose to offer a scrip dividend alternative for the 
2012 final dividend. 

Should the Board decide to do so shareholders will be advised 
no later than 5 April 2013. The Board’s decision will be dependent 
on the stock market conditions, in particular the level of the share 
price relative to the net asset value per share, up to that date.

Details of the apportionment between the PID and non-PID 
elements per share will be confirmed at that time as, in the 
event of a scrip alternative being offered, the cash dividend 
may be wholly PID and the scrip alternative may be partly PID 
and partly non-PID. 

12

Intu Properties plc 2012 Annual ReportGovernance and  
remuneration overview

Corporate Governance

Remuneration

The governance structure of the Group, set out in detail in 
the Governance section on pages 60 to 73, is well established 
and includes delegated committees of the Board operating 
under specified terms of reference, established authority limits 
at Board, Committee and individual level, and various policies 
and procedures to cover specific matters such as transactions 
out of the ordinary course of business and a Board Protocol to 
be observed for all related party transactions.

The Board Protocol was adopted in 2012 for situations where 
a proposed transaction could be captured by the related party 
provisions of the Listing Rules or by the Companies Act 2006, 
and was observed during the Company’s transactions with the 
Peel Group (of which John Whittaker is Chairman) in early 2012.

Succession planning, particularly at Board level, has been 
a key element of the work of the Nomination and Review 
Committee and the Board in 2012 following the decisions of 
John Abel and Rob Rowley to retire as Non-Executive Directors. 
We appointed Adèle Anderson as a new Non-Executive Director 
and member of the Audit Committee on 22 February 2013; 
Adèle will take over from Rob Rowley as Chairman of the 
Audit Committee in due course.

Adèle’s appointment also results in an increase in the proportion 
of women (from 9 per cent at the end of 2012 to 20 per cent at 
the end of 2013 assuming there are no further board changes) 
on the Intu Board, demonstrating our ongoing commitment 
to boardroom diversity but without comprising the overriding 
requirement to appoint the best qualified candidate for the role.

Intu has adopted most of the new provisions of the 2012 UK 
Corporate Governance Code and will introduce measures during 
2013 to address the remaining new Code requirements which 
relate to ensuring the integrity of the annual report and accounts. 

The Remuneration Committee carried out a root-and-branch 
review of remuneration policy, followed by a comprehensive 
process of consultation with large shareholders seeking views 
on our proposed new remuneration policy.

The key areas of focus for the Remuneration Committee in 
2012 have been:

•	Proposed new remuneration policy to be introduced effective 
from 1 January 2013 subject to shareholder approval at the 
forthcoming AGM. The proposed new policy has been the 
subject of a comprehensive consultation with shareholders

•	The Executive Directors’ salaries will be increased by 4.9 per 
cent from 1 April 2013, broadly in line with increases across 
the Group

•	The annual bonus awarded to the Executive Directors for 

the year ended 31 December 2012 was determined by the 
Remuneration Committee under the rules of the existing 
bonus scheme, which will cease to operate, subject to approval 
by shareholders of the new proposals at the forthcoming 
AGM. If approved, the new arrangements will take effect from 
1 January 2013.

•	Improved transparency through early adoption of the 

majority of the Government’s new recommendations for 
remuneration report structure and content

Shareholder concerns raised during the 2012 reporting season 
have also been addressed, in particular the continued use 
of a single-performance criteria and cliff-vesting for awards 
of options, and the Remuneration Committee’s discretion 
to accelerate the vesting of options on a change of control. 
The new PSP provides for sliding scale vesting on two separate 
performance criteria, measured over three, four and five-year 
periods. Additionally, the rules of the PSP provide that, on a 
change of control, awards of Performance Shares under the 
plan will vest to the extent that the Committee determines 
that any applicable performance conditions have been or 
would likely have been satisfied. The number of shares to 
vest in such circumstances will also generally be reduced to 
reflect a reduced service period.

13

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
We’ve worked on 
our retailer mix and 
catering offer, made 
high impact low outlay 
improvements and 
pursued consents for 
future growth.

14

Intu Properties plc 2012 Annual ReportCase study 
Braehead –  
bringing it all together

All the elements of Intu’s asset 
management approach and operational 
strategy can be seen working together at 
Braehead, Scotland’s best shopping and 
leisure complex.

We’ve reappraised the centre and made 
changes. We’ve worked on our retailer 
mix and catering offer, made high impact 
low outlay improvements, and pursued 
consents for future growth.

We have made good progress in bringing 
in new names such as Schuh. And we’re 
providing growth opportunities for 
successful retailers including Next, 
who are expanding into a new 35,000 
sq. ft. store.

We have invested in the food offer. As 
well as increasing the range, including a 
glamorous champagne bar, we’ve moved 
escalators to strengthen links with the 
main mall. We have refreshed the upper 
level with double height signage zones 
giving the mall a totally different feel.

At the same time we have established 
an 11 per cent increase in headline rent.

In early 2012 we bought 30 acres of land 
for future development and in December 
we took full ownership of the Xscape 
leisure scheme.

In November 2012 the Council resolved 
to recognise Braehead as a town centre 
and in January 2013 we submitted a 
planning application for a major 
expansion including a transport 
interchange, entertainment facilities, 
a hotel and 440,000 sq. ft. of retailing.

£200m

Proposed investment

11%

Increase in headline rent psf

Business model 
and strategy

In this section

16  Business model
18  Strategy
20  Key performance indicators
22  Our people
26  Key risks and uncertainties
28  Top properties

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy

Business model
Our focus, scale and quality set us apart 
allowing us to create value for shoppers, 
retailers and shareholders

We provide people  
with the perfect  
shopping experience

Allowing us to establish 
enduring relationships  
with retailers

With shopping centres in the best locations 
across the country. 

The powerful footfall that results is 
a compelling attraction for retailers. 

And by developing and actively managing 
these centres to provide the right mix of 
retail, leisure and catering.

While we demonstrate operating 
excellence, managing our centres to 
provide the right trading environment.

Our business model is enabled by:

Talented employees 

A robust capital structure

Professional, motivated and empowered 
teams, specialists in their field, focused on 
creating mutually-beneficial opportunities 
and relationships with partners.

Astute financial management to 
maximise funding options for disciplined 
and shrewd investment.

See Our people on pages 22 to 25

See Financial review on pages 44 to 49

16

Intu Properties plc 2012 Annual ReportOwnership of major UK shopping centres*

Intu

Hammerson

Land Securities

Henderson

PruPIM

Aviva

Westﬁeld

Standard Life

British Land

GIC

Canada Pension Plan

6

4

3

3

3

2

2

2

2

13

9

10

Of the top 25 UK shopping centres

2/3

Of the population live within 45 minute  
drive of an Intu centre

*  Number of shopping centres >400,000 sq. ft. in 50 highest rented locations 

where owner has at least 33 per cent share. Source: PMA 2012

Which delivers 
long-term growth 
for Intu

And generates 
returns for 
shareholders

This ensures that occupancy 
remains strong.

And drives rental income over 
the long term.

Our thriving centres are sought-after 
investments, supporting access to capital 
and creating value for shareholders.

A long-term focus 

A balanced approach to risk

Creative and collaborative approach 
to long-term investment and growth, 
facilitated by development expertise 
and community focus.

Risk management is underpinned by 
rigorous analysis in the context of potential 
threats to strategic objectives.

See Corporate responsibility on pages 52 to 57

See Key risks and uncertainties on pages 26 and 27

17

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy continued

Strategy
We have clear strategic objectives 
to ensure the business model is put 
into action effectively

We provide people  
with the perfect  
shopping experience

Allowing us to establish 
enduring relationships  
with retailers

Strategic objective

Strategic objective

To provide compelling destinations 
for shoppers

To be the landlord that retailers 
want to do business with

How we are delivering on our strategy

How we are delivering on our strategy

 – Finding and showcasing the best mix of retailers

 – Highest footfall locations across the UK

 – The most accessible locations for shopping and socialising

 – Specialist and collaborative approach to retail change

 – Excellent service, security and facilities

 – Impeccable yet cost-effective facilities management

 – Marketing events that create theatre and experience

 – Consistently deliver creative developments

 – Innovative and effective marketing

Progress 2012

Progress 2012

 – 26 new brands to our centres in 2012 including Forever 21, 
Nespresso and Hamley’s. Compelling brands such as Apple, 
Armani AX, L’Occitane, Office, Swarovski and Thomas Sabo 
introduced to new cities

 – Exciting new catering concepts introduced at most centres 
 See case study on page 43

during 2012 

 – Thousands attracted to our centres to take part in Elite’s 
national model search – nationwide media coverage of 
Braehead-based winner

 – Creative reconfigurations to deliver larger stores for Apple 

at Arndale, Schuh at Braehead, Forever 21 at Lakeside  

 See Operating review on page 39

 – Fourth successive year of improvement in Real Service 
retailer survey results – ‘Willingness to Recommend’ up 
three percentage points

Ongoing initiatives

Ongoing initiatives

 – 1,800 staff involved in ‘World Class Service’ programme - 

 – Launching intu.co.uk in April 2013, a transactional, 

coming to all intu centres in 2013  

 See Operating review on page 41

fashion-focused, mobile-enabled website with a curated 
range of products from our retailers

 – High profile national marketing events uniquely deliverable 

 – Nationwide intu brand will much improve the effectiveness 

through Intu’s network of prime centres

of centre-by-centre marketing spend

18

Intu Properties plc 2012 Annual ReportWhich delivers 
long-term growth 
for Intu

And generates 
returns for 
shareholders

Strategic objective

Strategic objective

To create long-term and sustainable 
growth in net rental income

To generate superior shareholder 
returns through dividend growth 
and capital appreciation

How we are delivering on our strategy

How we are delivering on our strategy

 – Astute investment in improvements

 – Tight cost control and lean operation

 – Specialist knowledge of emerging occupier and 

 – Efficient use of debt markets

management trends

 – Non-rental income from shopping centres

 – Long-term partnerships with local authorities 

and communities

 – Creative involvement of non-equity partners

Progress 2012

Progress 2012

 – Sector-leading innovation to direct leasing proves highly 

 – Well-timed convertible bond issue broadens the 

successful at Chimes, Uxbridge – now 100 per cent let with 
Swarovski and Office introduced  
 See case study on page 59

capital structure and accesses funds at a historically 
low interest rate 

 See Financial review on pages 44 to 49

 – Planning consent obtained for an additional 650,000 sq. ft. 

 – Replacing 55,000 lamps with LED lighting to save 

8,000 tonnes of carbon a year with just a three year 
payback period 

 See CR report on page 55

of retail and catering across the UK  
 See Operating review on page 40

Ongoing initiatives

Ongoing initiatives

 – Active management and major organic development 

 – Currently working with banks and advisers on a new debt 

projects being progressed at several centres with a view 
to long-term income growth  

funding platform  

 See Financial review on page 49

 See Operating review on pages 39 and 40

See how we’re performing against our KPIs on pages 20 and 21

19

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy continued

Key performance indicators 
We measure progress against strategic 
objectives using the following financial and 
non-financial performance measures

1. To provide compelling destinations for shoppers

Footfall

+3%

+2%

2010

2011

–1%

2012

Why is this important?
Footfall is an important 
measure of a centre’s 
popularity with customers. 
Retailers use this measure as 
a key part of their decision 
making process on where to 
locate their stores.

How is this measured?
Footfall numbers across 
Intu’s centres, including 
those managed by our 
partners, are captured 
using a combination of 
person or car counting 
cameras located at specific 
entrance and exit points 
within the centre.

How have we performed?
Although footfall fell 
slightly in the year, the 
Group’s centres continue 
to out-perform the national 
benchmark which showed 
a three per cent reduction 
in 2012, as measured 
by Experian.

2. To be the landlord that retailers want to do business with

Occupancy

98%

97%

96%

94%

Why is this important?
Intu aims to maximise 
the occupancy of its 
properties as vacant 
space will adversely 
impact on a centre’s 
trading environment.

How is this measured?
The passing rent of the 
Group’s properties currently 
occupied expressed as a 
percentage of the passing 
rent of occupied and the 
ERV of unoccupied 
properties. 

How have we performed?
Occupancy is marginally 
below the 2011 comparable 
figure but remains above 
the IPD benchmark figure.

2010

2011

2012

IPD
(retail)

3. To create long-term and sustainable growth in net rental income

Like-for-like net rental income Why is this important?
Measures the organic 
growth in income generated 
from the Group’s properties 
 in the year. 

+3.6%

+2.1%

2010

2011

–2.7%

2012

n Current year
n Historic comparative
n Benchmark comparative

20

How is this measured?
Removes from the 
year-on-year movement 
in net rental income the 
impact of acquisitions, 
developments and disposals.

How have we performed?
The reduction in the 
like-for-like net rental income 
was due to successful 
relettings only partly 
offsetting the impact of 
tenant failures in 2012.

See Corporate Responsibility KPIs on pages 51 to 57

Intu Properties plc 2012 Annual Report4. To generate superior shareholders returns through dividend growth and capital appreciation

Shareholder return

+30%

+17%

+7%

–14%

2010

2011

2012

FTSE REIT
Index*

Total financial return‡

20%

4%

4%

2010

2011

2012

Income performance

15.4p

16.5p

16.1p

2010

2011

2012

Why is this important?
Combines share price 
movement and dividends to 
produce a direct measure of 
the movement in shareholder 
value in the year.

How is this measured?
Uses the movement in share 
price during the year plus 
dividends paid in the year.†

How have we performed?
Both the Group and the FTSE 
REIT index out-performed 
the UK stockmarket in 2012. 
However strong performance 
from Central London 
property focused companies’ 
shares lead to the Group’s 
share price growth not 
matching the UK REITs 
index in the year.

Why is this important?
This is a measurement of the 
total return movement in the 
Group’s balance sheet value 
through the change in the 
Group’s property valuations 
and its capital structure. 

How is this measured?
Uses the movement in 
adjusted net asset value 
plus the impact of dividends 
paid in the year.

How have we performed?
Total return in the year 
largely comprises the 
dividend paid in the year as 
despite an increase in the 
Group’s property valuations, 
net asset value growth was 
restricted by exceptional 
costs.

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Why is this important?
The measure gives the 
underlying income 
generated in the year 
which gives an indication 
of the Group’s ability to 
pay dividends.

How is this measured?
Uses underlying earnings 
per share, which excludes 
property and derivative 
valuation movements 
and exceptional income 
or charges.

How have we performed?
Underlying earnings per 
share fell slightly in the 
year due to the impact 
of tenant administrations 
more than offsetting 
additional rent from 
new lettings and lower 
underlying finance costs.

Prime property assets

+11%

+1.0%

+0.6%

Why is this important?
Measures the capital return 
on the Group’s property 
assets and compares 
this with the IPD index, 
a recognised industry 
benchmark.

How is this measured?
Includes the capital growth 
from the  Group’s properties.

How have we performed?
The quality of the Group’s 
properties was reflected 
in another year of strong 
out-performance of the 
IPD benchmark.

2010

2011

2012 IPD monthly
index (retail)

–5.8%

*  Data source: Bloomberg.
†  Uses the Intu share price on 11 January 2011 as the opening value for the 2011 shareholder return being the day on which Simon 

Property Group announced they had no intention to make a firm offer for the Group. This is consistent with methodology used in 2010.

‡  No peer group comparable data is provided due to the lack of available data on a comparable time period.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy continued

Our people
Our employees are fundamental to the 
success of our business and to the delivery 
of a high quality service for our occupiers 
and shoppers

Our people

2012 in review

We are committed to providing a working environment which is 
stimulating and challenging, giving employees opportunities to 
reach both personal and professional goals whilst delivering 
business targets.

During the past year Intu has developed a new employee 
proposition that both complements the corporate strategy 
and stands us out as an employer of choice, built around six 
key themes.

Employee 
Life-Cycle

Performance 
Management

Learning & 
Development

HR 
Strategy

Succession 
Planning

Reward & 
Recognition

Employee 
Engagement

All of us are passionate about the work carried out at Intu, 
proud of our reputation as the market leader of the UK 
shopping centre industry. Providing a first-class service to 
all of our customers, whether they are shoppers, retailers 
or colleagues, is key to our work ethic.

How are we structured?
Our teams are grouped into five core strands to underpin the 
business model.

Asset Management drive the success of the centres by 
delivering sustainable asset growth through innovation and 
sound investment and commercial decision-making, including 
proactive leasing of retail units, dealing with rent reviews and 
lease renewals, and managing smaller active asset management 
projects involving the amalgamation or extension of stores.

Operations add value to assets through excellence and 
innovation in the dual disciplines of Operations & Marketing and 
Property Management. Centre teams ensure that the building is 
properly maintained and that there is a welcoming, clean, safe 
and secure environment for retailers and shoppers. Marketing 
ensure that our centres are at the forefront of the minds of 
both and are portrayed in the best possible light, and Property 
Management manage relationships with existing tenants.

Development and Construction is responsible for the planning, 
management and delivery of new build, refurbishment and 
extension projects across the portfolio from inception through 
to completion.

Finance provide commercial support to the business, develop 
management information and KPIs, facilitate forecasting and 
budgeting, provide statutory and management reporting, and 
manage essential transactional processes.

Governance and Support encompasses Legal, Secretariat, 
Human Resources, Information Technology, Corporate 
Responsibility and Communications, and Public Relations.

22

Intu Properties plc 2012 Annual ReportMajor activities during the year included:

Recruitment
It was a year of growth. We have brought 106 new faces into 
the Group, creating new roles in digital marketing, planning, 
legal support, project and energy management, and customer 
experience. At the same time we have significantly strengthened 
our ICT team by insourcing first line support and creating a new 
Operational Technology team.

Engagement
Much of the year was spent empowering departmental teams to 
interpret and act upon the results of our first ever all employee 
survey. The survey was repeated towards the end of the year 
and achieved a response rate of 88 per cent. The key themes 
which emerged from the initial survey included:

•	Communication, including integration of different areas

•	Reward and recognition

•	Working environment

•	Learning and development for staff

•	Consistent management

•	Articulating our values

Learning and development
A total of 1,149 man days were devoted to training in 2012, 
ranging from front line customer service training to technical 
and people skills and achieving professional qualifications. 
There is a strong focus on Continuing Professional 
Development, particularly for the significant number of our staff 
who hold professional qualifications in a number of disciplines, 
and training needs are routinely assessed for every individual as 
part of the performance appraisal process.

Reward and recognition
Providing a competitive remuneration structure helps us retain 
and motivate the best people. As well as base salaries that are 
benchmarked against our peers in the industry, employees are 
eligible for an annual bonus based on corporate measures that 
reflect the executive remuneration policy (described more fully in 
the Directors’ remuneration report on pages 74 to 88) and related 
to individual performance. A proportion of the annual bonus is 
awarded in deferred shares to encourage focus on the Company’s 
growth. Managers may also be rewarded with longer term share 
options and a joint ownership plan and all staff can join the Share 
Incentive Plan subject to a qualification period.

This year we have introduced formal recognition for outstanding 
performance, with 60 staff qualifying for service awards. 
We also added an Employee Assistance Programme, provided 
by the Retail Trust, to our already extensive package of 
non-financial benefits.

Launch of intu rebranding  
Engaging the engagers

Engaging all our employees is essential for successful 
delivery of a unified culture with new values underpinning 
the development of the intu brand and vision. We have 
identified ten principles for successful internal engagement.

Following research among staff, including analysis of 
our survey results, we developed an engagement toolkit 
based around the ten principles. A workshop for 40 key 
managers, including an understanding of the emotional 
cycle of change, helped test the engagement framework 
and further refine the toolkit.

Since the ‘Big Reveal’ to staff in January 2013, managers 
have used the toolkit to run tailored programmes for all 
centres and departments to embed the new values and 
develop understanding of how we can improve our 
customer experience.

Ten principles for internal engagement
•	Optimise communication channels
•	Talk to staff first
•	Improve the two way flow
•	Strongly signal listening and action
•	Fast and delayered
•	Simplify explanation of the strategy
•	Build a family
•	Approachable, familiar people
•	Make every communication count
•	Do things differently, do different things

Our values 
Creative

We look at the familiar and we see something different; 
we are insightful and imaginative, but not for their 
own sake, for we never lose sight of what’s important 
and relevant

Bold

We act confidently and decisively, always knowingly, 
perhaps at times controversially, but never rashly or 
without consideration

Genuine

We are true to ourselves, act fairly and communicate clearly; 
we say what we mean and we mean what we say. We 
recognise our obligations to our stakeholders and the wider 
society, and commit to put our utmost into everything we do

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy continued

Employee numbers

2012

2011

2010

234

638

586

1,149

1,313

Training days

2012

2011

2010

365

Age proﬁle

Under 30

30–50

Over 50

21%

51%

28%

Gender proﬁle

Male

Female

53%

47%

Looking ahead
We continually seek to build on the core strengths of our 
employees by developing their skills and experience and 
ensuring they are fully engaged with the business objectives 
and our values.

Whether an individual’s role is strategic, operational or in a 
support function, their contribution to the business is valued. 
Everyone works as part of a team; everyone is expected to make 
a valid contribution to the success of the organisation. We go 
about our business with a sense of urgency and accountability, 
understanding what we do matters, feeling valued, and enjoying 
what we do.

A series of projects will continue to improve the employee 
proposition within the scope of the defined HR strategies.

Employee life cycle
•	Introduce an online recruitment process linked to the 

corporate website

•	Expand the functionality of our employee self-service portal 

EmpowerMe

•	Review the format of our employee documentation in the 

context of corporate re-branding

•	Improve communications with staff temporarily out of 

the business

•	Build the new brand and values into our induction processes

•	Learn from the experience of staff who leave us

Learning and development
•	Implement a management development programme using 
recognised business school techniques to enhance the skills 
of senior managers and emerging talent

Gender proﬁle for managers

•	Provide coaching and mentoring for key individuals

•	Continue the development of our operational management in 

conjunction with our service providers

•	Ensure all appropriate staff have Personal Development Plans

•	Encourage all staff to gain work experience in other disciplines 

within the organisation to enhance understanding of the 
wider picture

•	Review training undertaken by all staff with line managers and 

the Executive Committee

Male

Female

57%

43%

Under 1 year

2–10 years

10–20 years

Over 20 years

13%

63%

21%

2%

Service proﬁle

24

Intu Properties plc 2012 Annual ReportReward and recognition
•	Senior Managers and Executive Directors review salaries of 
their teams against agreed parameters and market position 
and propose individual bonus levels based on performance 
against objectives during 2012

•	Remuneration Committee review proposals and approve 
Senior Manager and Executive Director salary levels and 
bonus awards

•	Awards are communicated to employees by March and 

awards paid in March and April

•	A group-wide scheme for recognition of excellence will be 

introduced during the year ahead

•	We will undertake a review of our benefits package and 

approach to flexible working

Employee engagement
•	The results of the 2012 survey will be discussed with all staff 

in the first quarter of the year and a series of local action 
plans developed

•	Our engagement programme linked to the launch of the new 
brand and values will be delivered to all staff (see ‘Engaging 
the engagers’ case study) and also provide the introduction to 
a world-class service programme being rolled out across the 
shopping centres

•	We will review and improve our health and well-being offering 

to staff

•	Facilities for staff welfare at 40 Broadway and in our centres 

will be upgraded

•	Tangible links will enable staff to participate in the Company’s 
corporate responsibility, community support and sustainability 
programmes at all levels

Performance management
•	Having conducted an interim review of the staff appraisal 

system in 2012, with simplification of the approach, a more 
thorough review will integrate the learnings from the interim 
system and provide a more robust approach including the 
transparency with performance related reward

•	Job descriptions and employment policies are regularly 

reviewed to ensure they remain up to date and in line with 
best practice

Succession planning
•	Individuals have been identified as having the potential to 

succeed to more senior roles within the business. We will work 
with each of these individuals and their managers to ensure 
this potential can be realised

•	An overall succession plan is presented to the Board as part of 
a regular review of our Human Resources to ensure we have 
the right capabilities to achieve strategic objectives

The 2012 employee survey

The survey was conducted over a two week period in 
November 2012 and 573 out of 653 eligible employees 
responded (88 per cent). In the multiple choice section, 
corresponding questions were also put to the staff in 
our centres employed by our Facilities Alliance partners 
Europa and Inviron to allow comparable analysis of the 
responses across the portfolio.

Intu employees were also asked:

•	What one question would you like to ask the Intu 

Executive team?

•	What single, practicable, idea do you have to make 

working at Intu a better experience?

The response to these questions will be published on our 
Intranet throughout the year and the ideas proposed will 
be considered in detail and implemented where possible.

An improved score was achieved in 30 out of the 44 core 
questions and over 70 per cent of the questions resulted 
in over 60 per cent of respondents agreeing or strongly 
agreeing with the proposition. Collective analysis of these 
results by an independent body produced an overall 
engagement score of 717 (2011: 701) with favourable 
movement in four of the five domains that make up 
the engagement index: work environment, reward, 
development, and operating culture. The line of sight 
domain score was unchanged.

93%

Of all staff agree customer service  
is a top priority at Intu

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy continued

Key risks and uncertainties
Effective identification and management of 
risk is a major factor in Intu’s ability to achieve 
its strategic objectives

Identify
•	Strategic	and	operational	 
risk reviews

•	Reviews	undertaken	by	shopping	
centre teams, facilities management 
partners and corporate functions

•	Executive	Director	and	 
Board level challenge 

Output  
risk list

Implement
•	Plan	allocates	responsibilities 
for implementation

•	Risk	and	Internal	Audit	oversight

•	Progress	reporting	to	 
Audit Committee

Output 
improved risk profile

Strategic 
objectives
•	Compelling	destinations

•	Landlord	of	choice

•	Long-term	sustainable	NRI	growth

•	Superior	shareholder	return

Analyse
•	Review	of	existing	controls

•	Prioritisation	based	on	impact	
and likelihood of affecting 
strategic objectives

Output 
prioritised risk register

Action
•	Range	of	options	considered	 
(mitigate, avoid, transfer or accept)

•	Audit	Committee	review	 
and challenge

Output 
risk register action plan

26

Intu Properties plc 2012 Annual ReportIntu’s risk management framework
Intu recognises that it faces a number of risks in achieving its 
strategic objectives. Effective identification and management of 
these risks is a major factor in Intu’s ability to deliver strategic 
objectives. The risk management framework targets the early 
identification of keys risks and the formation of plans to remove 
or mitigate them. It focuses on managing these risks to 
maximise returns and minimise negative impacts.

The Intu Board has overall responsibility for managing risk 
across the Group. The process as designed, which is illustrated 
opposite, involves identification and review of risk involving all 
areas of the business and resulting in appropriate action plans. 

Operational reviews performed by each team focus on the 
impact of changing risks on the function’s key objectives and, 
along with review of current controls and the resulting action 
plans, are subject to executive challenge. The executive team 
also conducts a strategic review which considers changes in the 
overall environment, which may hinder the business in achieving 
its objectives. Combined action plans are subject to a detailed 
review and challenge process, including by the Audit Committee. 
Progress on implementation of actions is regularly monitored 
and informs the next phase of identification and analysis.

Areas of focus

Risk and impact

Mitigation

Change 2012 commentary

Property market

 – Focus on prime assets

 – Overall increase in valuation of assets, out-performing 

Macro environment weakness could 
undermine rental income levels and 
property values, reducing return on 
investment and covenant headroom

 – Covenant headroom monitored and 

stress tested

 – Regular monitoring of tenant strength 

and diversity

IPD benchmark

 – Slight improvement in covenant headroom on 

individual properties during the year

 – Positive efforts to reduce exposure to ‘at risk’ tenants

Business review

Financing

 – Regular reporting to Board of current and 

 – Financial position strengthened by convertible bond

Reduced availability of funds could 
limit liquidity leading to restriction 
of investing and operating activities  
and/or increase in funding cost

projected funding position

 – Effective treasury management aimed at 
balancing long debt maturity profile and 
diversification of sources of finance

 – Focus on early refinancing of debt

Financial review

Operations

 – Strong business process and procedures 

 – Excellent H&S standards at all sites

Accidents, system failure or external 
factors could threaten the safe and 
secure environment provided for 
shoppers and retailers, leading to 
financial and/or reputational loss

supported by regular training and 
exercises

 – Annual audits of operational standards 
carried out by internal and external 
consultants

 – Culture of visitor safety

 – Retailer liaison and briefings

 – Appropriate levels of insurance

 – Further investment in Risk Management

 – Comprehensive risk based insurance cover in place

 – Robust crisis management and communication protocols

 – Regulatory change – Carbon Trust Standard renewal 
achieved in March 2012 and CRC compliance in place

Corporate governance

Strategy and execution

 – Annual strategic review by Board 

 – Ongoing focus on the consumer opportunity and 

Misjudged or poorly executed strategy 
fails to create shareholder value

informed by external research and advice

 – Board and management team 

experienced in shopping centre and 
broader retail industry

 – Engagement with national and 

international retailers

 – Specialist advice and extensive research 

supporting rebrand initiative

optimising performance of pre-eminent centres to benefit 
from ongoing structural shift in UK retail, including broader 
offer of leisure and catering and inclusion of ‘theatre’

 – Intu rebrand initiatives aimed at ensuring centres 
benefit from the scale and revenue opportunities 
afforded by a national brand and increased engagement 
with consumers through deployment of technology in 
centres and creation of an online shopping platform

Business review 

Development and acquisition

 – Capital Projects Committee reviews 

 – Continued focus on pre-let space before committing 

Misjudged or poorly executed 
project results in increased cost 
or income foregone, hence fails 
to create shareholder value

detailed appraisals before and monitors 
progress during significant projects

 – Research and third party due diligence 

undertaken for transactions

capital to projects

 – Considerable number of planning applications including 

local consultations, positioning the Group for next 
phase of growth

 – Adequate contingency allowances

Business review

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business model and strategy continued

Top properties
Super-regional centres

Please refer to glossary for definition of terms

4

3

1

5

2

1
intu Trafford Centre  

2
intu Lakeside  

3
intu Metrocentre 

4
intu Braehead  

5
Cribbs Causeway  

Market value

£1,800m

Market value

£1,093m

Occupancy

97%

Occupancy

97%

Size (sq. ft. 000)

Size (sq. ft. 000)

1,967

1,434

Market value

£878m

Occupancy

96%

Size (sq. ft. 000)

2,092

Market value

£601m

Occupancy

95%

Market value

£232m

Occupancy

95%

Size (sq. ft. 000)

Size (sq. ft. 000)

1,135

1,075

Annual property income

Annual property income

Annual property income

Annual property income

Annual property income

£84.4m

£57.6m

£48.5m

£31.2m

£12.8m

% ownership

100%

% ownership

100%

% ownership

90%

Headline rent ITZA

Headline rent ITZA

Headline rent ITZA

£400

£345

£320

% ownership

100%

Headline rent ITZA

£250 Scottish

English equivalent £335

% ownership

33%

Headline rent ITZA

£305

Number of stores

Number of stores

Number of stores

Number of stores

Number of stores

242

254

357

124

153

ABC1 customers

ABC1 customers

ABC1 customers

ABC1 customers

ABC1 customers

55%

Key stores

House of Fraser 
Marks & Spencer 
Debenhams 
Apple 
H&M 
Topshop 
Zara 
Primark

53%

Key stores

Marks & Spencer 
Primark 
Apple 
Next 
H&M 
Topshop 
Hollister 
Gap 
Sainsbury’s

65%

Key stores

John Lewis 
Marks & Spencer 
Apple 
Next 
Topshop 
Timberland 
Jigsaw 
Hobbs 
Hugo Boss 
H&M

63%

Key stores

Selfridges 
John Lewis 
Next 
Superdry 
Hollister 
Apple 
Kurt Geiger 
Ted Baker 
Banana Republic 
Nespresso 
Victoria’s Secret 
Odeon Cinema 
Legoland Discovery Centre

59%

Key stores

House of Fraser 
Debenhams 
Marks & Spencer 
Hugo Boss 
Guess 
Topshop 
Zara 
Primark 
Forever 21

28

Intu Properties plc 2012 Annual ReportTop in-town centres

Please refer to glossary for definition of terms

8

6

10

7

9

6
Manchester Arndale  

7
St David’s, Cardiff

8
intu Eldon Square

9
intu Watford

10
intu Victoria Centre

Market value

£383m

Occupancy

98%

Size (sq. ft. 000)

1,600

Market value

£276m

Occupancy

97%

Size (sq. ft. 000)

1,391

Market value

£251m

Occupancy

97%

Size (sq. ft. 000)

1,350

Market value

£324m

Occupancy

92%

Market value

£308m

Occupancy

94%

Size (sq. ft. 000)

Size (sq. ft. 000)

726

981

Annual property income

Annual property income

Annual property income

Annual property income

Annual property income

£21.5m

% ownership

48%

£16.3m

£15.0m

% ownership

50%

% ownership

60%

£17.6m

% ownership

93%

£18.1m

% ownership

100%

Headline rent ITZA

Headline rent ITZA

Headline rent ITZA

Headline rent ITZA

Headline rent ITZA

£250

£185

£250

£250

£216

Number of stores

Number of stores

Number of stores

Number of stores

Number of stores

232

199

151

141

120

ABC1 customers

ABC1 customers

ABC1 customers

ABC1 customers

ABC1 customers

62%

Key stores

Harvey Nichols 
Apple 
Burberry 
LK Bennett 
Topshop 
Next 
UGG 
Hugo Boss 
Superdry 
Zara 
Hollister 
YO! Sushi 
Nando’s

66%

Key stores

John Lewis  
Debenhams 
Marks & Spencer 
Apple 
Hollister 
Hugo Boss 
H&M 
River Island 
Hamleys 
Armani Exchange 
Gap

57%

Key stores

John Lewis 
Fenwick 
Debenhams 
Waitrose 
Apple 
Hollister 
Topshop 
Boots

63%

Key stores

John Lewis 
Marks & Spencer 
Apple 
Zara 
Primark 
Next 
Lakeland 
Phase Eight 
Lego 
H&M

53%

Key stores

John Lewis 
House of Fraser 
Next 
Topshop 
Monsoon 
Boots 
Gap

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Average mobile device usage when 
viewing our websites in 2012

50

40

30

20

10

%

July 
2011

Dec
2012

30

Intu Properties plc 2012 Annual ReportCase study 
Becoming digitally 
connected

We recognise that digital connectivity is 
an essential part of the shopping centre 
experience and will enable us and our 
retailers to build a closer relationship 
with our customers.

That’s why we are investing in a future-
proofed multichannel digital environment 
that provides free WiFi in centres 
and a seamlessly integrated online 
shopping platform.

Consumers will be able to buy online 
around the clock from our centres’ 
websites or intu.co.uk, for delivery to 
home or one of our centres. The free, 
high quality WiFi will enable customers 
in our centres to stay in touch with news 
and social networks and also to receive 
high value location-based offers. 

We have been working on the 
infrastructure during 2012 for rapid 
roll-out across our centres starting with 
the Trafford Centre in March 2013. 

Our ownership of the network will allow 
us to understand the customer’s digital 
as well as physical journey. Over time this 
will ensure we better understand dwell 
time in centres and online browsing and 
purchasing habits, which will help us 
expand our digital services. Interactive 
technologies like Quick Response codes, 
Augmented Reality and Near Field 
Communication will enhance the 
customer experience and in-centre 
events will be amplified through social 
media and intu.co.uk. 

All these initiatives, together with adding 
4G capabilities to our centres, will give us 
the complete digital proposition.

9m

Unique devices accessed our centre 
websites in 2012

£8m

To be invested in digital infrastructure

Business review

In this section

32  Market review
34  Valuations
36  Operating review

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business review

Market review

UK macro environment

The consumer opportunity

UK economic output showed no overall growth in 2012. 
Consumer confidence as measured by GfK NOP remains 
negative, broadly in line with a year ago. UK average household 
disposable income was also unchanged in the year, according 
to the Asda benchmark index, as the excess of household 
inflation over wage increases has been offset by a lower 
unemployment rate. 

Our research has confirmed that a visit to a shopping centre 
is about far more than just shopping. People are increasingly 
blurring the boundaries between shopping, eating and 
entertainment. Our customers value, for example, spending time 
together, discovery and something to entertain the whole family. 
Their experience is influenced by a range of physical and 
emotional drivers.

The clearest impact of the economic stagnation on retail 
property is the level of vacancy, which has remained steady 
at 14 per cent overall according to the Local Data Company 
(Intu – 4 per cent). The chart below illustrates that there is 
significant variation in vacancy rates between asset type.

A further impact of the lack of growth is the level of businesses 
failing. According to the Centre for Retail Research, 2012 was 
the worst year since 2008 with a 75 per cent increase in the 
number of failures compared to 2011. Tenant failures in the 
Group’s portfolio were at a low level in 2010 and 2011 but 
higher at 6 per cent of passing rent in 2012. 

We expect that the UK will continue to be a low growth 
environment for some time. The principal risks facing our 
business are the same as a year ago, namely tenant failures 
and lease expiries as retailer business models adjust to the 
fundamental changes taking place in the UK retail marketplace. 
Our focus, scale and specialism enable us to manage these 
risks effectively.

Technology as an enabler

Technology has facilitated further blurring of boundaries. 
Long-standing shopping habits are altering radically, with new 
channels involved in all aspects of a purchase. Estimates indicate 
that almost half of UK internet users now make use of the 
internet at some stage of the shopping process, more than 
10 per cent of UK retail sales are now online and two thirds of 
all UK consumers have researched online before buying in store.

Use of mobile devices for research and buying has exploded in 
the last two years. Research has shown that by mid 2012 over 
half of fashion consumers had used a mobile device to make 
purchases and almost two thirds of smartphone owners had 
used their phone in purchase processes. Several retailers have 
commented that shoppers using more than one channel spend 
more overall than those using a single channel. 

Vacancy rate, UK retail property by class

20.0

16.0

12.0

8.0

4.0

% units

2005

2006
Big shopping centres
Smaller prime shopping centres

2007

2008
Town centres

Secondary shopping centres

2009

2010

2011

2012

Source: PMA

32

Intu Properties plc 2012 Annual Report“ Along with the best retailers,  
we recognise the importance of operating 
coherently through multiple channels.”

Intu – seizing the opportunities of 
the changing marketplace

Along with the best retailers, we recognise the importance of 
operating coherently through multiple channels. The synergy 
between online and physical retailing is demonstrated by 
click-and-collect and return to store facilities. These offer 
additional flexibility and convenience to consumers and, for 
retailers, fulfilment efficiencies and incremental revenue. 

We announced last month our innovative strategy to give our 
shopping centres a unified identity, Intu, with a unique digital 
presence including a transactional website. 

Online messaging encourages customers to visit stores. In turn, 
in-store experiences are enhanced by digital functionality. 
A flagship presence in the highest footfall destinations such 
as our centres is key to retailers’ overall brand reach. 

By combining our physical nationwide network with the 
launch in April 2013 of intu.co.uk and the roll-out of other 
digital services, we will offer the compelling retail mix and 
convenience of a shopping centre experience both online 
and in our physical malls.

Retailers

The last few years have been a time for review and 
reorganisation for retailers in respect of their store portfolios. 
The trend for fewer stores is also applicable for fashion retailers 
as multichannel reinforces the need to be able to reach 
customers wherever they are, whenever they want to shop.

Store location analysis has highlighted to some retailers the 
need to remove poor performing stores from portfolios with 
other retailers using their lease expiry profile to close non 
profitable locations. Given this strategy, prime locations are 
becoming more prime and secondary locations are struggling 
to offer the customer the desired retail mix. Our portfolio is 
well positioned to continue to benefit from this focus on 
quality locations. 

Store retailing formats are also changing as retailers seek 
to offer the customer a brand experience when they shop at 
physical stores. Multichannel can mean looking and researching 
on a mobile device and touching, feeling and experiencing the 
brand in store. This has meant larger stores for a number 
of retailers as they seek to offer their customer the full 
brand experience. 

The market has also responded to customers’ catering 
‘wants’ – shoppers want to have coffee when they arrive, want 
lunch during their shopping day, maybe tea or champagne in 
the afternoon, and dinner prior to going to the cinema. National 
figures (source: CBRE) showing the number of units of multiple 
leisure and catering operators increased by more than a third 
over the last five years, compared to a 10 per cent increase in 
those selling comparison goods. 

33

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business review continued

Valuations

“ Significant out-performance of the benchmark 
reflects the high quality and resilient nature of our 
assets and the considerable active management 
efforts at each centre.”

Retail property investment market

The attractions of prime property as an asset class have been 
reinforced in 2012, not least by the widening of the spread 
between income yields and risk free investment returns. 
Demand for prime shopping centres remains strong in particular 
from UK REITs and overseas capital such as sovereign wealth 
funds, with institutional funds showing some appetite for 
smaller lot sizes. Supply of prime shopping centres has remained 
limited, with the majority of current schemes on the market 
comprising secondary and tertiary assets. Prime yields have 
remained unchanged with some tightening as a result of the 
supply and demand dynamics which have been demonstrated 
through some transactional evidence during the year.

In the secondary shopping centre market, a segment in which 
our regional centres do not fall, the occupational market was 
tough reflecting weak consumer demand and negatively 
influenced valuation and investor interest. Yields for such 
assets remained elevated.

Yield by retail sub class

Comparison of Intu yield and 10 year gilt yield

10.0

9.0

8.0

7.0

6.0

5.0

4.0

12.0

10.0

8.0

6.0

4.0

2.0

6.92%

5.94%

3.79%

1.83%

%

2002
Prime shopping centres
Prime high street shops

2004

2006

2008
Prime retail warehouses
Secondary shopping centres

2010

2012

%

Source: DTZ

34

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Intu weighted average nominal equivalent yield
IPD Monthly Index Retail

BBB GBP 10 Year corporate bond index yield

Gilts 10 years

Intu Properties plc 2012 Annual Report2012 performance

The aggregate market value of the Group’s investment property 
was steady in the first half of the year and rose by 0.6 per cent 
in the second half. This is a significant out-performance of the 
benchmark IPD monthly index and reflects the high quality 
and resilient nature of our assets and the considerable active 
management efforts at each centre. 

There was some variation within the portfolio, with notable 
changes including:

•	positive evidence on recent lettings increasing ERVs at 

Trafford Centre, Manchester Arndale and Braehead

•	worsened yield and reduced income at Victoria Centre, 

Nottingham, as flexible leases were entered into while we 
waited for approval of major redevelopment plans

•	improved yield at Metrocentre due to satisfactory settlement 

of a major lease maturity cycle

•	more conservative estimates of income achievable and risk 

associated with the upcoming lease expiry cycle at 
The Potteries, Stoke-on-Trent 

•	outward yield adjustment at The Glades, Bromley, reflecting 

valuer’s caution during the early stage of upgrading the 
tenant mix

•	positive impact of progress in our plans for a major extension 

at Lakeside

Group revaluation surplus – like-for-like
Benchmark* capital growth

Group weighted average nominal equivalent yield
Like-for-like change in Group nominal equivalent yield 
Benchmark* equivalent yield shift

Group initial yield

Group change in like-for-like estimated rental value (ERV)
Benchmark* change in rental value index

* IPD monthly index, retail

The out-performance of the national benchmark was apparent 
in both the change in valuation yields and in the underlying 
rental levels to which the yields are applied. 

Yields: The equivalent yield of 5.9 per cent is a weighted 
average of figures ranging from 5.4 and 5.6 per cent at Trafford 
Centre and Lakeside to 7.5 and 7.7 per cent at The Glades, 
Bromley and The Potteries, Stoke-on-Trent. Reflecting the 
UK market-wide investment focus on prime, our larger centres 
have continued to out-perform. The eight centres larger than 
1,000,000 sq. ft., which represent more than three quarters of 
our asset value, have all seen yield compression or stability in 
the second half of the year.

Estimated rental value (‘ERV’): After a slight reduction in early 
2012, aggregate like-for-like ERV increased marginally in the 
second half despite the UK benchmark continuing to fall. In 
some cases, such as Manchester Arndale, we have achieved this 
by extending the prime pitch through creative projects in the 
malls to increase customer flows and unlock potential income. 
In other centres including Braehead and Lakeside, leases have 
been secured above the previous prime pitch rental tone, 
providing evidence of a new headline rent. 

Full year  
2012
0.6%
-5.8%

Second half  
2012
0.6%
-3.0%

5.94%
-4bp
+22bp

5.94%
-2bp
+12bp

First half  
2012
–
-2.9%

5.96%
-2bp
+10bp

5.04%

5.04%

5.08%

-0.3%
-1.3%

–
-0.9%

-0.3%
-0.4%

35

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
4

10
3

6

1

13

7

11

9

5

12

8

14

2

Intu asset valuations

Business review continued

Operating review

Introduction

We made good progress in 2012 on our priorities for the year, 
namely to optimise the performance of existing assets, to 
identify further initiatives and to create financing flexibility 
to advance the business:

•	our shopping centres have increased in value and shown 

considerable operating resilience as other UK retail property 
has struggled (see ‘2012 performance and operating 
indicators’ below)

•	we have acquired strategic sites, achieved significant planning 
consents and prepared promising expansion and improvement 
projects (see ‘Creating compelling destinations’ below)

•	we have improved our financial position through the issue 

of a convertible bond (see Financial review) 

•	we have launched a nationwide consumer-facing brand 
and a transformed digital proposition (see ‘Launching a 
nationwide consumer-facing brand and becoming digitally 
connected’ below)

We have kept our clear focus on the best UK shopping centres 
and, with £7.1 billion invested in the sector and ten of the UK’s 
top 25, have a scale unmatched by any other operator in the UK:

•	as illustrated by the chart, two thirds of our investment 

properties’ value is accounted for by five super-regional centres 
and over 85 per cent by our largest ten centres

•	aiming to improve the experience of our customers to 

generate footfall, dwell time and spending, we provide the 
environment to which leading retailers are attracted and in 
which they flourish. This creates the virtuous circle which 
drives our financial return

36

1234567891011121314£7.1bn Super-regional centres (66%) 1 Trafford Centre (£1,800 million) 2 Lakeside (£1,093 million) 3 Metrocentre (£878 million) 4 Braehead (£601 million) 5 Cribbs Causeway (£232 million) Town and city centres (34%) 6 Manchester Arndale (£383 million) 7 Victoria Centre, Nottingham (£308 million) 8 The Harlequin, Watford (£324 million) 9 St David’s, Cardiff (£276 million) 10 Eldon Square, Newcastle (£251 million) 11 Chapelﬁeld, Norwich (£242 million) 12 The Chimes, Uxbridge (£213 million) 13 The Potteries, Stoke-on-Trent (£166 million) 14 The Glades, Bromley (£164 million)Intu Properties plc 2012 Annual Report“ We start 2013 with robust operating indicators and 
considerable momentum across the business from  
a range of attractive investment opportunities.”

Outlook

We start 2013 with robust operating indicators and 
considerable momentum across the business from a range of 
attractive investment opportunities available to the Company.

Whilst tenant failures and lease expiries from 2012 and in the 
current year are risks which will impact 2013 earnings, our focus, 
scale and specialism enable us to manage these risks effectively. 
Other factors which will impact 2013 earnings are the outcome 
of the refinancing on which we are engaged and the rebranding 
exercise including start up costs relating to intu.co.uk.

Our strategic priorities for 2013 are:

•	to optimise the performance of our existing assets, prioritising 

medium-term value creation

•	to continue to invest in the business, including pursuing our 

pipeline of development opportunities

•	to increase our financing flexibility to advance the business

•	to take forward our new brand, intu, and transformed 

digital proposition

The series of initiatives announced on 15 January including a 
£25 million investment in people and infrastructure will position 
us to seize the opportunities arising from the structural and 
technological changes impacting the UK retail marketplace.

We continue to believe that Intu is well placed to deliver 
strong returns for shareholders as the scale of our prime 
regional shopping centre business and our specialist focus 
continue to bring opportunities for expansion including 
through attractive acquisitions.

2012 performance and 
operating indicators

We have out-performed in a challenging market and delivered 
a 4.1 per cent total financial return. Overall, our properties 
have shown considerable resilience, with capital values moving 
forward and occupancy falling just 1 per cent despite failures in 
the year of tenants representing 6 per cent of rent. Our centres 
have benefited from new retailers and restaurant openings 
bringing a fresh offer. 

Principal measures of performance include:

•	Valuation: aggregate like-for-like growth in the value of the 

Group’s properties was 0.6 per cent, representing a £41 million 
surplus created in the year. This is a significant out-
performance compared with the 5.8 per cent decline in capital 
value of the benchmark IPD monthly index. This reflects the 
prime nature of our assets and the considerable active 
management efforts at each individual centre to improve its 
leadership position within its region (see ‘Valuations’ on 
pages 34 and 35)

•	Like-for-like net rental income: after a 3.6 per cent increase in 
2011, like-for-like net rental income fell 2.7 per cent in 2012. 
While gross rent increased due to an extra month of Trafford 
Centre and £5 million of rent increases on new and continuing 
leases, this was more than offset by £13 million of rent 
foregone and direct costs associated with tenant failures

Change in like-for-like net rental income

10.0

8.0

6.0

4.6%

6.0%

5.3%

4.0

2.0

0.0

–2.0

–4.0

8.5% 8.5%

2.3%

3.5%

3.6%

2.1%

–3.4%

–4.3%

–2.7%

%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2011

2012

•	Footfall: after three per cent compound annual growth in 
footfall for the previous three years, 2012 saw a reduction 
of one per cent. The number of visitors to our centres has 
continued to out-perform the national benchmark as 
measured by Experian (three per cent reduction)

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business review continued

“ Offering people access 
to the top retailers and 
iconic brands they love.”

•	Lettings: 169 new long-term leases have been agreed, 

representing £44 million of new annual rent in aggregate 
seven per cent above previous passing rent and in line with 
valuation assumptions 

•	Occupancy: at 96 per cent, occupancy has remained broadly 

steady in the second half of the year and marginally below the 
97 per cent at 31 December 2011. This compares favourably 
with the UK average shop vacancy of 14 per cent. We have 
successfully relet the vast majority of units let to tenants 
who entered administration during the year, often to new 
owners of the same fascia seeking to continue their most 
profitable outlets. Four per cent of rent is currently 
attributable to tenants in administration, of which three per 
cent is being traded

•	Retailer sales: with an aggregate increase of around one per 
cent in the year, estimated retailer sales in our centres have 
out-performed the national trend. The benchmark BRC 
like-for-like non-food sales index implies a flat overall outcome, 
with marginal changes in each of the four quarters of 2012 
after an overall one per cent decline in 2011. In our centres, 
we have seen increases in sales of electricals, footwear and 
jewellery but reductions in music, books and cards. Based on 
these estimates, the ratio of annual rent to turnover of our 
tenants has marginally reduced 

•	Lease expiries: average lease maturity has increased slightly 

to 7.8 years (31 December 2011 – 7.5 years). In 2012 we 
particularly focused on Metrocentre, where we have now 
cleared 90 per cent of 2011/12 lease expiries. 10 per cent 
of the Group’s rent roll is due to expire in 2013 and we are 
carefully managing centre-specific concentrations at Cribbs 
Causeway and The Potteries, Stoke-on-Trent

Lease expiry proﬁle
Weighted average expiry 7.8 years

40

30

20

10

10%

8%

10%

10%

31%

27%

%

2013*

2014

2015

2016

2017–
2020

2021+

*  Excludes four per cent in respect of leases which have expired of which 
  around two-thirds are in negotiation or solicitors hands 

38

•	Short-term leases: leases for fewer than five years represent 
one per cent of passing rent, two per cent of space and three 
per cent of ERV (2011 – one per cent, two per cent and three 
per cent respectively). These are more concentrated than 
previously, with around half now in areas where development 
is anticipated principally in the Victoria Centre, Nottingham 
and Eldon Square, Newcastle

Creating compelling destinations

Our aim is to provide the very best places to meet, eat, drink 
and be sociable. 

We focus on offering people access to the top retailers and 
iconic brands they love along with attractive entertainment 
and leisure options. This gives customers more reasons to 
come to our centres and encourages them to stay longer. 

We have made significant progress in 2012 with projects that 
will improve each of, and in some cases extend, our centres: 

•	enhancing the tenant mix – 169 new long-term leases signed 

for stores and restaurants (see ‘Retailer mix’ below) 

•	a number of active management projects which have 
been completed or are underway (see ‘Creative active 
management’ below)

•	our pipeline of developments – these range from high 

impact, low cost changes on the malls and tenant-specific 
improvements through to additional restaurant clusters and 
major extensions (see ‘£1 billion pipeline over 10 years’ below)

•	we are also launching the brand ‘intu’ to unify our centres 
and aim to offer seamless integration of the physical and 
digital shopping centre experience (see ‘Launching a 
nationwide consumer-facing brand and becoming digitally 
connected’ below)

The activities at Braehead in the year provide an excellent 
illustration of our management approach. We have reappraised 
the centre and made changes. We have worked on our 
retailer mix and catering offer, made high impact, low outlay 
improvements, made strategic acquisitions and pursued 
planning consents for future growth:

•	we have introduced new names and provided growth 
opportunities for successful retailers including Next, 
who are expanding into a new 35,000 sq. ft. store

Intu Properties plc 2012 Annual Report26

Brands new to our centres

£70m

Investment by retailers in shop fits

•	we have invested in the food offer by increasing the diversity 

•	major existing retailers such as Next, Topshop and H&M 

and moving escalators to strengthen links with the main mall. 
We have refreshed the upper level with double height signage 
zones giving the mall a totally different feel

•	we trialled a highly successful customer service programme 

on which intu’s ‘World Class Service’ will be based 

•	we have established an 11 per cent increase in headline rent

•	in early 2012 we bought 30 acres of land for future 

development and in December we took full ownership of the 
Xscape leisure scheme

•	we have secured planning consent for a 36,000 sq. ft. 

extension to the adjacent retail park

•	in November 2012 Renfrewshire Council resolved to recognise 
Braehead as a town centre and in January 2013 we submitted 
a planning application for a major expansion including a 
transport interchange, entertainment facilities, a hotel and 
440,000 sq. ft. of retail

Retailer mix
New long-term leases for 139 stores and 30 restaurants were 
signed in 2012, with retailers investing almost £70 million 
in fitting out their stores. 26 retailers including Nespresso, 
Victoria’s Secret and Hamley’s took a unit in one of our centres 
for the first time.

Catering and leisure operators now account for more than 
12 per cent of the rent roll at seven of our centres. Our research 
shows that customers who visit a catering outlet in any 
individual centre stay longer and spend more than those who 
only shop in the centre. On average for 2012, the increase was 
around two thirds for both measures.

Creating the best destinations is not only about scale – our 
strategy is to re-balance the mix across the different sectors. 
Our dining offer ranges from impulse and refuelling offers such 
as juice bars and coffee shops, to treats such as champagne 
bars and fine casual restaurants such as Carluccio’s and 
Jamie’s Italian. 

Significant trends include: 

•	international entrants Banana Republic, Victoria’s Secret 
and Forever 21 opening early phase stores at the larger, 
super-regional centres 

•	growing retailers such as Apple, Thomas Sabo, Swarovski and 
Schuh expanding into more cities, in some cases with creative 
new fascias to expand their product offer

expanding into larger stores in the best locations to better 
showcase their range 

•	catering operators such as Tragus (Café Rouge, Bella Italia, 

Strada) and Mitchells & Butler (Miller & Carter, Toby Carvery, 
Harvester) and 360 Champagne and Cocktail Bar 
(Metrocentre, Braehead) broadening the range of food and 
beverage offers 

•	established retailers such as Arcadia and WH Smith 

reconfiguring their existing store portfolio to suit new 
business models

We have also used our specialist knowledge and relationships 
to introduce direct leasing at The Chimes, Uxbridge. This sector-
leading innovation has created exciting tenant mix evolution with 
high profile new additions such as Swarovski and Office.

Creative active management
We have completed a number of projects in the period, ranging 
from unit reconfigurations, refreshment works and creation of 
new space. Relatively small projects have the capacity to make 
a significant change to the feel of a mall, altering shopper flows 
and the trade of nearby units. Examples include:

•	Forever 21’s 35,000 sq. ft. three level flagship store in a new 
roof box at Lakeside, which opened on time in December

•	MetrOasis, a pod of four new restaurants at Metrocentre, 

which opened on time and achieved rental levels ahead of plan

•	Braehead’s upper mall refreshment and new catering concepts 
have created a better ‘feel’ and improved customer circulation 
(see above)

•	Arndale’s escalator relocation has opened sight lines and 

improved pedestrian flows, extending the prime pitch

Acquisition and investment
Following the acquisitions of Trafford Centre and Broadmarsh, 
Nottingham, in 2011, acquisition activity has been smaller scale 
in 2012 involving attractive opportunities adjacent to several 
of our existing centres. We acquired our former partner’s 
50 per cent share of Xscape Braehead (see note 41) and 
invested £25 million in a number of sites adjacent to our centres 

to provide flexibility for further expansion. 

Capital expenditure on active management projects at our 
centres amounted to £18 million in the year. Those completed 
in the period will generate a direct 8 per cent stabilised return 
on cost through new rent as well as indirect benefits to the 
wider centres.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Business review continued

“ £1 billion pipeline  
over 10 years.”

£1 billion pipeline over 10 years
The table sets out the principle components of our development 
pipeline. 650,000 sq. ft. of planning consents have been secured, 
around 1,000,000 sq. ft. are awaiting determination and detailed 
specifications being prepared for others.

The status of our major projects is as follows:

Trafford Centre: planning consent has been approved for 
around 110,000 sq. ft. of retail space on a new upper level at 
Barton Square. We are in advanced discussions with a major 
fashion retailer who is not currently represented in Trafford 
Centre. Combined with the planned roof to enclose the 
courtyard, this will significantly broaden the appeal of Barton 
Square for a wider range of uses

Lakeside: planning consent has been secured for a 325,000 sq. ft. 
retail extension and an 81-bed hotel. We are working on plans 
for a cluster of new retailers, to create a point of difference 
from the existing tenant mix. Subject to pre-letting progress, 
construction of the extension could start in 2014. Following 
strong public support for outline leisure proposals, detailed 
plans are being developed for a new leisure destination at 
Lakeside including a larger cinema, cafes, restaurants, bars and 
other leisure and fitness operators

The Harlequin, Watford: we are due to exchange an agreement 
for lease with the local authority for the adjoining Charter Place 
and anticipate making a planning application shortly. We have 

been encouraged by the strong level of interest from retailers 
since we announced our plans for new leisure, catering and 
larger format retail units

Braehead: following the resolution by Renfrewshire Council in 
autumn 2012 to designate Braehead as a town centre, we have 
now submitted a planning application (see above) 

The Potteries, Stoke-on-Trent: we have secured planning 
consent for a 58,000 sq. ft. leisure and catering development 
and have leases in solicitors’ hands for the cinema and 
restaurants at terms in accordance with the development 
appraisal. The detailed designs and tendering are in progress 
and we expect to start construction in the second half of 2013

Nottingham: we are progressing plans for refurbishment of the 
Victoria Centre, which will be followed by the redevelopment of 
Broadmarsh and the extension of the Victoria Centre

Launching a nationwide consumer-facing 
brand and becoming digitally connected

We announced last month our innovative strategy to give our 
shopping centres a unified identity, intu, with a strong digital 
presence including a transactional website. 

Nine million unique devices, half of which were mobile, accessed 
our centre websites last year. From spring 2013, our 30 million 
shoppers will be able to enjoy online the compelling retail mix 
and convenience of a shopping centre. 

Active management
Victoria Centre, Nottingham, refurbishment
Eldon Square, Newcastle, redevelopment and restaurants
The Potteries, Stoke-on-Trent, leisure extension
Barton Square, Trafford Centre, courtyard enclosure and second floor retail
Other active management

Major extensions
Watford Charter Place
Lakeside Northern extension
Braehead extension4
Lakeside leisure extension
Nottingham projects

Size1
000 sq. ft.

Indicative
timing2

Intu  
investment  
£m

Range of
 returns3
%

–
–
58
112
152
322

380
438
475
225
505
2,345

2013-15
2013-14
2013-14
2014-15

2014-16
2015-17
2015-17
2016-18
2016-19

36
10
16
30
108
200

80
180
200
80
260
1,000

6-10%

7-8.5%

1 Represents net additional floorspace of retail, catering and leisure
2 Timing subject to change due to a number of internal and external factors
3 Range of estimated initial stabilised return on cost. Does not include significant indirect benefit on centre’s regional status
4 Size excludes arena and hotel

40

Intu Properties plc 2012 Annual Report“ Our aim is to transform our digital proposition  
and for intu.co.uk to provide the UK’s leading digital 
shopping centre experience.”

Our aim is to transform our digital proposition and for intu.co.uk 
to provide the UK’s leading digital shopping centre experience. 
We have the scale and focus, through our operations and 
research, to understand what a customer wants and to deliver it. 
We are investing £25 million, with an estimated £4 million 
impact on underlying earnings in 2013, in our teams and digital 
infrastructure over three years to: 

Direct ownership of the network and WiFi technology enables 
us to understand the entire customer journey and experience 
and will improve our in-centre footfall and dwell analytics. The 
network will also provide a platform for expansion of our digital 
services and mobile customer service offerings, plus interactive 
technologies such as augmented reality (AR), quick response 
(QR) code scanning and near field communication (NFC). 

•	roll out intu’s visual identity and our ‘World Class Service’ 

programme at our 12 directly-managed centres

International

•	install our own future-proofed, centre-wide, high capacity 

fibre optic cabling and WiFi networks

•	launch intu.co.uk, a transactional, fashion-focused, 

mobile-enabled website with a curated range of products 
from our retailers 

Our objective from these initiatives is to generate a stronger 
relationship with consumers, delivering more frequent visits, 
longer dwell time and increased spend. This will in turn enhance 
our proposition to retailers and open new sources of income. 
We aim to reinforce our market leadership position as we 
elevate our centres’ role in people’s daily lives.

Nationwide consuming-facing brand
Our national brand will enable us to market ourselves more 
effectively to retailers both in the UK and internationally, to 
develop new commercial partnerships, to provide creative 
events for our customers and is essential to the provision of 
intu.co.uk. 

Our cultural shift is underway, embedding the principles of our 
customer service ethos. From May 2013, the new brand and 
visual identity will be rolled out across our centres in the form of 
physical signage and national consumer activity commencing 
with a major launch event. New national commercial 
partnerships are scheduled to take place throughout the year.

Digitally connected
Consumers will be able to buy online around the clock from 
our centres’ websites or intu.co.uk, for delivery to home or 
one of our centres. Within our centres, our customers will be 
connected to high quality WiFi, enabling them to stay in touch 
with news and social networks, stream and watch video and be 
open to receiving relevant mCommerce messaging (on request). 
WiFi will also facilitate shopping research and access to 
retailers’ websites.

The Group has the following investments outside the UK:

•	11.4 million redeemable joint venture units in Equity One, 

a US retail REIT, providing an effective interest of 9 per cent. 
These were acquired in January 2011 as a result of the 
restructuring of our previous investment in Californian 
property and are valued at £147 million based on the 
31 December 2012 share price of $21.01. Dividends in the 
year amounted to $0.88 per unit 

•	32 per cent of listed Indian shopping centre developer, 
Prozone, and 10 per cent of its former parent company, 
the Indian listed retailer Provogue. These interests combined 
were valued at £43 million at 31 December 2012 

•	an option to purchase a site in Spain with planning consent for 

a major regional shopping centre

Equity One owns, develops and manages US neighbourhood 
shopping centres anchored by supermarket chains. The 
company was active during the year in raising both equity and 
debt at advantageous rates. Its programme of capital recycling 
continued with acquisitions focused on opportunities for 
development and reconfiguration as US demand improves. 
These potential growth prospects were reflected in a 24 per 
cent rise in the share price in 2012 compared to a rise in the 
US REIT index of 14 per cent.

Prozone was demerged from Provogue in March 2012 and listed 
as an independent property developer in September. Its first 
operational shopping centre in Aurangabad continues to trade 
promisingly and work has commenced at the mixed use projects 
in Coimbatore, Nagpur and Indore. 

David Fischel 
Chief Executive

27 February 2013

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Offering the best 
places to meet, eat, 
drink and be sociable.

42

Intu Properties plc 2012 Annual ReportCase study 
Offering refreshment and 
dining experiences

With seven centres where catering and 
leisure operators represent 12 per cent or 
more of total rent, our visitors now expect 
a strong, high quality and wide ranging 
catering offer suitable for every time 
of day.

Creating the best destinations isn’t only 
about scale – our strategy is to re-balance 
the mix across the different sectors. 
Our selection ranges from impulse and 
refuelling offers such as juice bars and 
coffee shops to destination treats such 
as champagne bars and fine casual 
restaurants such as Carluccio’s and 
Jamie’s Italian.

Innovation is the key – we are broadening 
our appeal to all our visitors across the 
demographic spectrum, making their 
shopping experience more entertaining, 
engaging and ever-changing. In 2012 we 
introduced new and exciting operators in 
nearly all of our centres – that’s 25 new 
concepts for our visitors to try.

•	360 Champagne and Cocktail Bar 

openings at Metrocentre and 
Braehead have introduced fun, theatre 
and glamour

•	At St David’s, Cardiff, we introduced 

two new restaurants to Wales

•	Our 15,000 sq. ft. development 

MetrOasis brought four new dining 
concepts to Metrocentre

And there’s more to come – with exciting 
plans for further evolution of the catering 
offer at nine centres.

400 

Outlets

25 

Catering brands introduced in 2012

Financial review

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43

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Financial review

In 2012 the Group’s financial 
management has focused on 
creating, through an appropriate 
medium-term funding structure, 
the financing flexibility to advance 
the business. In October 2012 we 
issued a £300 million 2.5 per cent 
convertible bond due 2018. 

Key points of note
•	Financial results satisfactory in challenging market 

background (see ‘Results for the year ended 31 December 
2012’ below)

•	Underlying earnings per share slightly down at 16.1 pence

•	NAV per share at 392 pence; total return for the year 

4 per cent

•	Improved financial flexibility (see ‘Financial position at 

31 December 2012’ below)

•	New £300 million 2.5 per cent convertible bond due 2018 

issued in October 2012

•	Debt to assets ratio in targeted range at 49.5 per cent, would 
reduce to around 45 per cent were the convertible bonds to 
convert to equity

•	Interest cover ratio at 1.69x above the target level of 1.6x

44

Results for the year ended  
31 December 2012

The general retail environment in the UK has been challenging 
in 2012. It is therefore encouraging that the Group’s underlying 
earnings per share only fell slightly in the year and that property 
valuations were in aggregate positive resulting in a small 
increase in adjusted net asset value per share.

Income statement
The Group recorded a profit for the year of £159 million, an 
improvement on the profit of £34 million reported in the year 
ended 31 December 2011. At an underlying level, excluding 
valuation and exceptional items, earnings were marginally lower 
at £138 million (2011 – £139 million).

The major factors in the increase in profit to £159 million are 
valuation and transaction-related items, including:

•	a non-cash credit rather than charge arising from the change 

in fair value of the Group’s financial instruments. 2012 
benefited from a £31 million gain, whereas 2011 included a 
£193 million charge. The derivatives are largely interest rate 
swaps used to hedge the interest rate payable on a significant 
proportion of the Group’s floating rate borrowings

•	a lower level of acquisition and disposal activity, with the 

2011 results having benefited from gains arising on both the 
acquisition of the Trafford Centre and the disposal of the 
C&C US business but including exceptional administration 
costs related to the transactions

•	a reduction in the revaluation gain on property valuations to 

£41 million (2011 – £63 million)

•	higher exceptional finance costs, largely interest rate swap 

amendments, which amounted to £61 million in 2012 
compared to £48 million in 2011

•	the receipt in 2012 of a distribution of shares upon demerger 
of newly listed Indian shopping centre developer, Prozone, 
from its former parent the listed Indian retailer, Provogue

Intu Properties plc 2012 Annual Report £363m

Net rental income

Underlying earnings, which excludes valuation and exceptional 
items, was marginally lower in 2012 at £138 million as shown in 
the chart below and as set out in the Other information section. 
Taking into account additional shares issued as part of the 
Trafford Centre acquisition, underlying earnings per share 
reduced by 2 per cent to 16.1 pence. 

Underlying earnings bridge 2011–2012

150

140

130

120

110

100

£m

139

+3

+6

–8

138

–2

2011

Trafford 
Centre

Net 
rental 
income

Net 
ﬁnance 
costs

Other

2012

The principal components of the change in underlying earnings 
are as follows: 

•	while steady overall due to the full year impact of the 

acquisition of Trafford Centre, like-for-like net rental income 
reduced by 2.7 per cent as rent increases on new and 
continuing leases were more than offset by the impact of 
tenant administrations (see below)

•	underlying net finance costs, which exclude exceptional items, 
reduced due to the favourable impact of increased access to 
lower rates currently available more than offsetting the full 
year finance cost effect of the Trafford Centre acquisition

•	the impact of ongoing administration expenses increased to 

£27 million (2011 – £24 million), largely due to higher 
employee related costs as the Group builds on its existing skills 
base (included in ‘Other’ in the chart above).

Gross rental income
Head rent payable

Net service charge expense  
and void rates
Bad debt and lease incentive  
write-offs
Property operating expense

Net rental income
Net rental income margin

Year ended  
31 December  
2012  
£m
442
(25)

Year ended  
31 December  
2011  
£m
432
(26)

417

406

(13)

(10)
(31)

363
87%

(9)

(6)
(27)

364
90%

The Group’s gross rental income grew 2.3 per cent largely due 
to the impact of an extra month of income from Trafford Centre, 
acquired 28 January 2011. We have also continued to achieve 
increases in rent on long-term lettings, in 2012 at an average of 
7 per cent (2011 – 6 per cent), however this has been offset in 
the current period by rent foregone on vacancies arising from 
tenant administrations.

Retailer failures are also responsible for the three percentage 
points reduction in the net rental income margin through a 
combination of lost rent, higher irrecoverable service charges, 
void rates, bad debts and lease incentive write offs. 

Property operating expense in 2012 included £10 million of 
direct costs in respect of the Group’s car park operations and 
a £8 million contribution towards shopping centre marketing.

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45

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
 
Financial review continued

 £3,515m

Net assets (diluted, adjusted)

Balance sheet
The Group’s net assets attributable to shareholders have 
increased by £0.1 billion to £3.0 billion at the end of 2012 with 
the increase largely resulting from higher property values. 

As detailed in the table below, net assets (diluted, adjusted) have 
increased by £23 million from December 2011 to £3,515 million 
as at the end of December 2012. 

Investment, development 
and trading properties
Investments
Net external debt
Other assets and liabilities
Net assets
Minority interest
Attributable to shareholders
Fair value of derivatives (net of tax)
Other adjustments
Effect of dilution
Net assets (diluted, adjusted)

31 December  
2012  
£m

31 December  
2011  
£m

7,011.8
189.7
(3,504.2)
(691.1)
3,006.2
(29.2)
2,977.0
481.8
56.6
–
3,515.4

6,903.7
203.7
(3,374.2)
(787.6)
2,945.6
(23.5)
2,922.1
520.9
45.9
3.8
3,492.7

The reduction in other assets and liabilities in the year is due to 
settling accrued balances for a CPO at St David’s, Cardiff, (£27 
million) and REIT entry charges (£15 million) and a reduction in 
the provision for fair value of derivative financial instruments 
due to payments made in the year.

Adjusted net assets per share
As illustrated in the chart below, diluted, adjusted net assets 
per share were 392 pence at 31 December 2012, an increase 
of one penny in the year. The increase is the net result of the 
property valuation gain and the retained profit for the year 
being only partially offset by the 15 pence per share of 
dividends paid in the year and the exceptional finance and 
administration costs.

Adjusted net assets per share bridge 2011–2012

420

400

391

+5

+16

+4

–7

–15

–2

392

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3

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I

The investments of £190 million as at 31 December 2012 
comprise the Group’s interests in the US and India. The 
investment in the US comprises 11.4 million shares in a joint 
venture with Equity One, a listed US REIT. Based on the Equity 
One share price of $21.01 at 31 December 2012 the Group’s 
investment has been valued at £147 million.

380

360

pence

The remaining investments represent the Group’s interests in 
India, largely comprising a 32.4 per cent interest in Prozone, a 
shopping centre developer. Provogue, the Indian retailer in 
which the Group holds a 9.9 per cent stake, undertook a 
demerger of Prozone in the first half of 2012. The demerger 
was achieved by way of distribution of shares in Prozone. The 
receipt of the additional shares is treated as a dividend valued 
at £10.2 million. Prior to the demerger the Group had a direct 
25 per cent holding in Prozone, following the demerger the 
Group’s holding in Prozone has now increased to 32.4 per cent. 
As Prozone is classified as an associate company of the Group, 
the holding is valued as the Group’s percentage share of the 
associate’s underlying net assets. The carrying value of the 
investment is based on the Group’s accounting policies and 
therefore includes property valuations undertaken in 
accordance with ‘Red Book’ guidelines.

46

Intu Properties plc 2012 Annual Report 
 
 
 
 
Cash flow
The cash flow summary below shows a net increase in cash in 
the year largely due to the £300 million convertible bond raised 
in the year offsetting capital expenditure and ongoing principal 
repayments of the Group’s debt.

Underlying operating cash generated
Net finance charges paid 
Exceptional finance and other costs 
Net movement in working capital
Taxation/REIT entry charge 
Cash flow from operations 

Capital expenditure on property assets
Sale proceeds of property/
investments
Other investing activities
Acquisition of businesses
Cash acquired with businesses
Cash sold with businesses 
Dividends
Cash flow before financing 
and equity raises 
Net debt raised/(repaid)
Equity capital raised
Other
Net increase/(decrease) in cash 
and cash equivalents

2012  
£m
344.3
(191.5)
(62.1)
(4.0)
(11.0)
75.7

2011  
£m
347.4
(201.4)
(68.7)
(3.5)
(41.1)
32.7

(81.2)

(26.9)

49.9
(17.2)
(4.2)
1.6
–
(117.2)

(92.6)
192.7
0.1
(2.3)

1.7
(8.3)
(72.8)
37.6
(20.3)
(125.6)

(181.9)
(36.8)
68.4
(4.1)

97.9

(154.4)

Capital expenditure on property assets includes £13 million in 
respect of the purchase of the Group’s 50 per cent share of the 
Centaurus Retail Park, which is adjacent to the Mall at Cribbs 
Causeway, £5 million in respect of King George V dock, which is 
adjacent to Braehead and £8 million for the Group’s 50 per cent 
share of the long leasehold interest in two units in Arndale, 
Manchester. A payment of £27 million was made to settle a CPO 
in respect of land related to the extension at St David’s, Cardiff. 
This balance was accrued in the Group’s accounts as part of 
the development expenditure. Expenditure on existing assets 
included St David’s, Cardiff (£5 million), Lakeside (£5 million) 
and Metrocentre (£8 million).

The sale of 4.1 million shares of the Group’s investment in 
Equity One generated £49 million in the year.

392p

Net assets per share (diluted, adjusted)  
at 31 December 2012

Net debt raised of £193 million is discussed in the Debt 
structure section below. 

The table below illustrates that recurring cash flow covers the 
2012 interim dividend of 5.0 pence per share that was paid in 
the year and the proposed final dividend of 10.0 pence per share 
that if approved will be paid in 2013. The actual cash dividend 
outlay will be less than the 15.0 pence per share dividend 
declared due to the introduction of a scrip dividend alternative 
with the 2012 interim dividend.

Underlying operating cash generated
Net finance charges excluding exceptional items 
Convertible bond coupon
Net movement in working capital
Recurring cash flow
Dividends paid and proposed for 2012

2012  
pence per  
share
40.3
(22.4)
(0.7)
(0.5)
16.7
15.0

Capital commitments
The Group has an aggregate cash commitment to capital 
projects of £50 million at 31 December 2012. 

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In addition to the committed expenditure, the Group has an 
identified uncommitted pipeline of active management projects 
and major extensions that may become committed over the 
next five years (see Operating review ‘Creating compelling 
destinations’ on pages 38 to 40). 

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It is anticipated that a total of approximately £50 million will be 
spent on capital projects in 2013.

Tax strategy and charge for the year
Being a Real Estate Investment Trust (REIT) significantly 
reduces the taxation costs of the Group, but brings with it the 
requirement to operate within the rules of the REIT regime.

The Group’s approach to taxation is approved by the Board and 
is subject to regular review. The Group maintains an open, 
up-front and no-surprises policy in dealing with HMRC and as a 
result it is anticipated the Group will receive a ‘low risk’ rating 
from HMRC once the recent major corporate transactions are 
fully absorbed into the Group. The Group seeks pre-clearance 
from HMRC in complex areas and actively engages in 
discussions on potential or proposed changes in the taxation 
system that might affect property tax and REIT legislation.

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47

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Financial review continued

Since becoming a REIT in 2007 the Group has paid REIT entry 
charge payments of £199 million.

The Group continues to pay tax on overseas earnings, any UK 
non-property income under the REIT rules, business rates, and 
transaction taxes such as stamp duty land tax and (until 17 July 
2012, when it was abolished) the REIT entry charge. In the year 
ended 31 December 2012 the total of such payments to HMRC 
was £28 million. In addition, the Group also collects VAT, 
employment taxes and withholding tax on dividends for HMRC. 
Business rates, principally paid by tenants, in respect of the 
Group’s properties amounted to around £250 million in 2012.

The tax credit in the period of £5.1 million comprises a current 
tax expense on US investments of £0.5 million and a deferred 
tax credit largely on the revaluation of interest rate swaps and 
investments of £5.6 million.

Financial position at  
31 December 2012

 £563m

Cash and available facilities  
31 December 2012

Debt maturity proﬁle

1,200

1,000

800

600

400

199

200

91

1,181*

970

708

505

2013

£m
* Includes £300m convertible bond.

2014

2015

2016

2017

2018+

During the year new net debt was raised through the issue in 
October of £300 million 2.5 per cent convertible bond due 2018. 
Debt repaid in the year included £45 million of drawings under 
the Group’s revolving credit facility with the balance being 
ongoing debt amortisation payments. Net of this and other 
scheduled repayments, new net debt amounted to £193 million.

31 December  
2012
49.5%
1.69x
6.1 years
5.2%

31 December  
2011
48.5%
1.71x
7.0 years
5.6%

98%

97%

At 31 December 2012, the Group had net external debt of 
£3,504 million, an increase of £130 million compared to 
31 December 2011. In addition to cash balances of £188 million 
the Group had undrawn facilities of £375 million at 
31 December 2012, giving total headroom at the end of 
2012 of £563 million.

Debt to assets
Interest cover 
Weighted average debt maturity
Weighted average cost of gross debt
Proportion of gross debt with 
interest rate protection

Debt structure
The Group’s debt is currently largely arranged on an asset-
specific basis, with limited or non-recourse from the borrowing 
entities to other Group companies. It is largely syndicated bank 
debt and CMBS structures with corporate-level debt limited to 
the revolving credit facility and convertible bond.

The chart illustrates that there is a minimal refinancing 
requirement in the next two years. The majority of the Group’s 
debt is due for refinancing between 2015-17 (see ‘Refinancing 
plan’ below).

48

Intu Properties plc 2012 Annual Report 
49.5%

Debt to assets ratio

Hedging
The majority of the Group’s debt is floating rate. The Group uses 
interest rate swaps to fix short-and medium-term interest 
obligations, reducing cash flow volatility caused by changes in 
interest rates. The Group is currently effectively fully hedged.

Refinancing plan
The Group targets a capital structure that provides it with 
maximum flexibility to continue investing in its shopping centre 
assets whilst minimising funding costs over the medium- and 
long-term.

The table below sets out the nominal amount and average rate 
of hedging, excluding lenders’ margins, in place under current 
and forward starting swap contracts.

In effect on or after:
1 year
2 years
5 years
10 years
15 years
20 years

Nominal  
amount  
£m
2,970
2,808
804
679
670
458

Average  
rate 
%
4.25
4.33
4.99
4.82
4.83
4.58

As previously detailed, the Group has a number of forward 
starting interest rate swaps, which due to a change in lenders’ 
practice can no longer be used for hedging current or future 
anticipated borrowing needs. Using the 31 December 2012 
forward interest rate yields, these swaps have a market value 
liability of £199 million. Based on these rates and values, it is 
estimated the Group will be required to make cash payments of 
£15 million in 2013.

Covenants
Full details of the loan financial covenants are included in 
the ‘Other Information’ section of this report. The Group is in 
compliance with all of its corporate and asset-specific loan 
covenants. As detailed in that analysis, the headroom over the 
minimum covenant levels has generally increased in the year.

In this context, the Group is currently working with its banks 
and advisers on a new debt funding platform, which is intended 
to become a central source of financing for the Group. This 
platform would enable us to access the capital markets on 
an ongoing basis alongside bank debt, thereby diversifying 
the Group’s sources of funds and lengthening its maturities.

The platform would aim to refinance the majority of the debt 
maturing in 2015–2017 and is likely to be secured on a pool of 
assets with the operational flexibility to contribute or substitute 
assets in the future. 

If implemented, the Group would incur break costs of exiting 
swaps in respect of the assets currently anticipated to form 
part of the pool of around £60–£70 million at today’s rates.

Matthew Roberts 
Finance Director

27 February 2013

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49

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
It is very important 
that we engage with 
and support our local 
community.

Paul Francis, General Manager, The Potteries

50

Intu Properties plc 2012 Annual Report 
Case study 
CR in action at The Potteries

“As The Potteries is located at the heart 
of the City of Stoke-on-Trent, it is very 
important to us that we engage with 
and support the local community. Our 
staff and retailers take great pride in 
their achievements in this area and are 
committed to achieving the same in the 
future.” Paul Francis, General Manager

The Potteries showcases Intu’s approach 
to Corporate Responsibility; the Centre 
team supports the local community, 
develops relationships with a range of 
stakeholders and always strives for 
environmental efficiency.

It was the first centre in our portfolio to 
achieve zero waste to landfill which is an 
environmental achievement and means 
that waste rebates from recycling can be 
passed back to retailers. The Centre has 
also rolled out LED lighting in its car 
parks during 2012, saving 34% electricity 
used in this area of the site in 2012 
compared with 2011. This is equivalent 
to a £8,000 saving.

The Potteries always looks to support 
people working in and using the Centre. 
During 2012 the charity Leap trained 
Centre staff on how to deal with conflict 
situations and in 2013, in partnership 
with the police and community groups, 
the team will provide mentoring to young 
people who are at risk of becoming 
involved in anti-social behaviour. 
Charitable community projects 
supporting children’s communication 
skills and the provision of musical 
concerts in hospices and hospitals were 
supported in 2012 with great success.

9%

Reduction in absolute  
carbon emissions

9,000+

People directly reached  
by CR projects

Corporate 
responsibility

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51

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Corporate responsibility

Better together
Bringing people and communities  
together – and helping them flourish – 
delivers shared benefits 

With two-thirds of the UK population 
within easy reach of one of our centres, 
we touch the lives of people right across 
the country. For them, we’re not just 
shopping destinations, but places to 
go with family and friends to enjoy life 
– meeting, eating, drinking, relaxing, 
being entertained, sharing secrets, 
swapping gossip and having a laugh.

So yes, we help build social togetherness, giving people a 
stronger sense of place and belonging. But we also make an 
important contribution to the economic well-being within 
and beyond these communities, providing jobs for local people 
and community programmes for the young and disadvantaged.

However, we know that our long-term success is linked not 
just to the vitality and well-being of the communities on 
our doorstep, but also to what happens in the wider world. 
The people who come to our centres expect us to carefully 
manage our impact on the environment. So, we’re committed 
to measuring how we’re doing and taking the right steps to 
do things better. This not only saves us money, but protects 
our reputation.

Highlights

£1.917m

In support provided to community

97%

Of waste diverted from landfill

External recognition

5,578

Hours of employee time donated

55,000

Efficient LED bulbs are being installed

Benchmarking against our peers through indices ensures that we remain focused on best practice and continuous improvement. 
We monitor the actions of our UK REIT competitors and work with them on important industry issues through membership of 
organisations such as the British Property Federation (‘BPF’) and the British Council of Shopping Centres (‘BCSC’). 

52

Intu Properties plc 2012 Annual ReportOur approach

At Intu we believe that corporate responsibility must be driven 
by the strategic aims of the Company and subject to the same 
types of governance controls as other areas of the business.

Our CR approach is based on three key pillars: communities 
and economic contribution, environmental efficiency, and 
relationships with our stakeholders. This strategic approach 
to CR allows us to target stakeholder concerns and issues that 
are most material to our business.

Improvements and targets
We work together with our stakeholders to improve all areas of 
our CR performance and set relevant goals and targets in order 
to allow us to critically monitor progress. For example, our 
centres continue to roll-out leading technology solutions and 
supporting energy management plans to optimise efficient 
energy use and explore new ways to bear down on our energy 
demands, costs and our corporate carbon footprint. Intu’s 
Carbon Alternative Review Group, drawing together different 
segments of our business, monitors this work alongside active 
consideration of appropriate alternative energy products and 
procurement methods.

CR governance
The Intu Board takes responsibility for determining policy and 
strategic direction on CR topics. The strategic direction of our 
CR programme is led by the CR Board Committee while the 
CR Management Committee takes responsibility for progress 
against our operational objectives. Both Committees met three 
times in 2012. Issues discussed at committees included the 
introduction of a new group-wide Energy Policy and Guide, and 
the decision to join the London Benchmarking Group. For more 
details on these Committees and other CR governance issues 
please see the CR Governance webpage (http://intugroup.co.uk/
responsibility/our-commitment/governance/).

Relationships

CR

Communities 
and Economic 
Contribution

Strategic 
objectives

Governance

Environmental 
Efficiency

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What drives our CR activities?

•	Securing our licence to operate: Our centres cannot be developed or marketed without engagement with local stakeholders. 

Local authorities, town centre management bodies and business partnerships help our centres to become key economic 
players for their local community and, more widely, for regions of the UK. Our CR initiatives work to bring partnerships together, 
including our employees, and foster relationships which help drive efficiency in our daily business operations and contribute to 
achievement of our longer-term business objectives.

•	Supporting risk management: Intu’s CR actions are ultimately tied to issues highlighted in the risk register of our business. 
Equally, forward-looking CR engagement can safeguard and enhance the reputation of Intu in the eyes of others including 
investors, regulatory bodies and retailers.

•	Contributing to cost management: Our approach to environmental and facilities management underpins our broader desire 

to operate in an environmentally responsible manner. It also contributes substantial cost savings.

53

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Corporate responsibility continued

Communities and economic contribution

Why it matters
Our shopping centres are integral to the communities they 
serve providing places to meet, eat, drink and socialise. They 
support local and national charities and NGOs that address 
fundamental issues in modern society which are important to 
the long-term success of our business. Our joint community 
projects focus on youth, education and the prevention of 
anti-social behaviour.

What we’re doing
Long-term community partnerships are a key feature of Intu’s 
community strategy. During 2012, we continued to work with 
15 community partners across 29 projects at our centres – 
8 of these were existing partnerships. These projects directly 
reached over 9,000 participants.

We sponsored The Big Sing at The Sage Gateshead for the sixth 
year running. In 2012 this project brought together 59 schools 
and 2,500 children to perform songs that they had been taught 
over the previous five months supported by musicians from 
The Sage Gateshead.

2012 was the 4th year of the Chairman’s Prize, open to all 
12 directly managed centres to showcase the community 
projects they have undertaken alongside our corporate 
projects. Winners receive a financial reward to present to 
their nominated charity or community group. The Chimes, 
Uxbridge won the prize in 2012 for their partnership with 
Hestia Hillingdon Women’s Refuge.

In support of young people and acknowledging the high 
percentage of entrants to retail careers aged under 25, 
we continue to fund the Retail Gold project which currently 
operates at three of our centres. Based upon a three-way 
partnership between Intu, our retailers and local Education 
Business Partnerships it has helped over 200 young people 
to date via retail placements undertaken as a key part of their 
school/college course learning.

In 2012 we joined the London Benchmarking Group (LBG) to 
help us further develop our community impact and output 
monitoring and enable us to work with others to develop 
relevant best practice.

In recognition of our community efforts, we are currently one 
of only 38 UK companies holding the BitC CommunityMark.

What we plan to do
•	New partnerships with two charities

•	Continuing relationships with 10 charities

•	New Green Gym to be launched close to Trafford Centre

•	Improve CR project measurement and reporting via our 

LBG membership

54

2012 Donations by type

Cash donations

Gifts in kind

Employee time

Facilitated donations

18%

53%

5%

24%

85%

Staff Recognition Fund 85 per cent 
subscribed in 2012

Addressing youth employability  
through Retail Gold

Intu has been helping students from the North East and 
South London gain business and retail qualifications to 
prepare them for the world of work.

Since 2005 we have been supporting young people 
through the Retail Gold Programme in collaboration with 
the Newcastle Education Business Partnership in the 
North East and in 2012 we added another region to this 
programme by partnering with the Bromley Education 
Business Partnership.

This year, students from four schools in the North East 
and one school in Bromley participated in the placement 
scheme with help from retailers such as John Lewis 
and Debenhams.

The placements gave students an opportunity to learn 
on the ‘shop floor’ – providing real meaning to their 
academic studies and allowing them special insight into the 
workings of the retail sector. Metrocentre, Eldon Square and 
The Glades will continue to partner with Education Business 
Partnerships to support school age students studying 
BTEC qualifications.

Intu Properties plc 2012 Annual ReportEnvironmental efficiency

Why it matters
We have a responsibility not just to manage and minimise 
our day-to-day environmental impacts but also to share good 
practices and influence our delivery partners, retailers and 
visitors towards more sustainable behaviour. Ultimately, we 
want to create a more sustainable operating environment.

What we’re doing
Our environmental initiatives typically focus on the areas 
of our shopping centres where we have the greatest ability 
to implement changes – namely in the common parts that 
we manage.

In 2012, we undertook a major roll-out of LED lighting to 
replace inefficient fluorescent lighting in the common parts of 
ten of our 12 directly managed centres. Through this initiative, 
we expect to save £1 million in energy costs per annum and 
approximately 8,000 tonnes of CO2e per annum after the phase 
two roll-out.

As part of our commitment to CRC Energy Efficiency 
scheme compliance, we achieved the Carbon Trust Standard 
Certification for the second time in 2012. This Standard certifies 
carbon reductions and our commitment to ongoing reductions.

We continue to monitor energy, carbon, waste and water 
performance using portfolio-wide automatic metering to improve 
our understanding and control of energy use. This year we have 
reduced our carbon emissions by nine per cent and increased the 
proportion of waste diverted from landfill to 97 per cent.

We’ve appointed a transport ‘champion’ at each centre to 
work alongside Intu’s Sustainable Travel Manager. Their work 
will include updating published Travel Plans. We continue 
to partner in six of the Government’s Plugged in Places 
programmes designed to increase electric vehicle use and 
required infrastructure.

What we plan to do
•	Reduce absolute carbon emissions by 30 per cent by the end 

of 2014 from a 2011 base

•	Reduce absolute water consumption by 10 per cent by end of 

2014 from a 2011 base

•	Divert 95 per cent of waste away from landfill by the end of 2014

•	Complete roll-out of phase two of LED lighting scheme at 

eight of our managed centres

National LED lighting project

Across 10 of our 12 managed centres we have replaced 
46,000 inefficient fluorescent tubes with LED lamps. 
This £3 million investment is estimated to save £1 million 
per year in electricity costs and will reduce lamp 
maintenance to practically zero. During 2012 the Group’s 
electricity use fell by 11 per cent. Phase two of our LED 

Absolute energy use (MWh) and normalised GHG emissions 
at directly managed centres

140,000

120,000

100,000

80,000

60,000

40,000

20,000

140

120

100

80

60

40

20

MWh
2009
 Electricity MWh   Gas MWh  
 District heating MWh                                      KgCO2e/m2 communal ﬂoor area

KgCO2e/m2

2012

2010

2011

Water use (m3) at directly managed centres

350,000

300.000

250,000

200,000

150,000

100,000

50,000

1460

1440

1420

1400

1380

1360

1340

m3
 Water used

2009

2010

2011

2012

m3

Water used m3/million visits

Waste disposal at directly managed centres

25,000

20,000

15,000

10,000

5,000

100

80

60

40

20

2009

tonnes
 Waste recycled (tonnes)
 Waste to energy (tonnes)
 Waste to landﬁll (tonnes)

2010

2011

2012

%

Waste to landﬁll (%)
Waste diverted from landﬁll (%)

project is now underway and will be completed in 2013 and 
will focus on lighting mall areas and back offices at eight of 
our directly managed centres. At the end of phase two a total 
of 55,000 LED lamps will have been installed

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Corporate responsibility continued

Relationships

We need to understand the needs and expectations of all in order to provide a business that offers a great shopping experience with 
informed investors, passionate employees and well supported communities. A key part of our Corporate Responsibility is managing 
and developing relationships with key stakeholders and engaging on relevant issues.

Stakeholder

Customers

Retailers

Why engaging with them is 
important

How we engaged in 2012

Outcomes

To maintain our competitive edge we 
must understand what our shoppers are 
looking for in a perfect shopping 
experience from retailer mix to customer 
service expectations.

 – Focus group sessions

 – Off Peak and Peak shopper interviews

 – Postcode surveys

Maintaining strong relationships and 
open dialogue with our retailers and 
other occupiers is a prime focus of our 
business. We work at all levels to 
connect with them to ensure that we are 
providing the high quality service they 
need for the success of their business.

 – Intu Chief Executive met with heads of top 

tenants in 2012

 – Merchants association meetings

 – Feedback from shopper engagement provided to 

all tenants

 – Intu is well informed of 

shoppers’ needs and wants in 
each of the areas in which we 
operate and is able to both 
tailor its offering to this and 
provide detailed information to 
retailer to allow them to do so

 – Corporately as well as at centre 
level we are well informed of 
retailer wants and needs and so 
are able to consider this in any 
planning

 – Retailers are kept well informed 
of the opinions of shoppers in 
each of our centres and are able 
to tailor their approach to that

Investors

Constructive engagement with our 
shareholders and potential investors, 
bankers and other organisations on 
socially responsible investment matters 
helps to raise awareness of how we’re 
managing material environmental and 
social risks. 

 – Active engagement with all investor enquiries 

 – Inclusion in sustainability 

including a number of enquiries from ethical funds

 – Active participation in responsible investor indices 

and tools such as Carbon Disclosure Project

 – For an outline of our approach to managing 

relations with shareholders, see page 71

indices including FTSE4Good 
and Dow Jones Sustainability 
Global Index

 – GRESB Green star status 

Our People

Our employees drive the delivery of a 
high quality service for our occupiers 
and shoppers. We are committed to 
providing a working environment which 
is stimulating and challenging, giving 
employees opportunities to reach both 
personal and professional goals whilst 
delivering business targets. We also 
believe that employee engagement 
is key to maintaining a motivated 
workforce especially during times 
of change.

 – Development of new intranet 

 – Feedback from 2011 employee survey provided 

and 2012 employee survey conducted

 – Presentations of annual and interim results

 – CR presentation

 – Head office staff received monthly presentations 

from different departments

 – Staff recognition fund 85% utilised

 – Chairman’s prize into its fourth year

 – For further details of our approach to Our People 

see pages 22 to 25

 – Increased understanding of 

employee views on workplace 
and Company issues

 – Greater cross department 
understanding following 
presentations

Improving community health 
by improving green spaces

Intu helps to boost local fitness and community volunteering 
by supporting The Conservation Volunteer’s (TCV) Green 
Gym projects. Since 2006 we have been partnering with TCV 
to offer Green Gyms in areas close to our centres. Green 
Gyms provide an opportunity for local people to volunteer 
and not only improve their own fitness but also create green 
spaces in the area where they live; activities include tree 
planting, haymaking and fence building. This year we 
sponsored three Green Gyms close to our centres. In 2013 
we will be sponsoring a fourth Green Gym at Partington not 
far from the Trafford Centre.

56

Intu Properties plc 2012 Annual ReportStakeholder

Why engaging with them is 
important

How we engaged in 2012

Outcomes

Local 
Authorities  
and 
Government

Local authorities grant us permission to 
grow our portfolio. Fostering strong 
relationships with local authorities, town 
centre management bodies and other 
community business partnerships is 
therefore vital to our centres, continued 
success and in turn drives the economic 
impact we have on local communities 
and, more widely, most regions of 
the UK.

 – General Managers and others within the business 
maintain and develop links with local authority 
representatives, Members of Parliament, town 
centre partnership organisations and other 
business and community groups within the 
catchment areas of our shopping centres

 – Intu senior team undertook a review of our 

membership of industry representative bodies 
as part of the assessment of our engagement 
with public policy issues of relevance to us

 – Work with Local Authorities on updating of 

Travel Plans

 – A group-wide database has 

been developed across all our 
local authority, parliamentary, 
real estate and industry 
contacts and is already 
supporting a co-ordinated 
programme of engagement 
on issues of relevance to our 
business such as business 
rates and national/regional 
planning policy issues

Suppliers

We recognise the wide range of potential 
impacts arising from our supply chain as 
it relates to the development of our 
property portfolio and the procurement 
of the products and services for its 
management and operation.

 – Intu, Europa and Inviron, our hard and soft service 
partners, formed our Facilities Alliance working 
directly alongside each other on shared KPIs

 – Facilities Alliance partners responded to the same 

 – More connected working across 

the Facilities Alliance

 – Stronger understanding of 
Facilities Alliance partners

employee survey questions

 – Volunteering opportunities and Staff Recognition 
Fund support made available to Facilities Alliance 
employees

Communities It is imperative that we maintain good 
links with our communities and that 
we undertake significant community 
consultations as part of our process for 
any planned developments. 

 – During 2012 we conducted three community 

 – We are able to include 

consultations regarding planned developments 
at our centres

community feedback in our 
planning process

 – For further details of our approach to 

communities see page 54

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Empowering employees

Tackling bullying through drama

In August 2012 a team of 15 walkers from five of our 
shopping centres walked 84 miles in the ‘Hadrian’s Wall 
Challenge’ to raise money for six charities. For further 
sponsorship 1,862 miles was walked on treadmills at our 
centres. In total £10,000 was raised including £2,000 
donated by our CR Staff Recognition Fund.

In 2012 we supported performances of Sweet Love close 
to Lakeside to reach over 1,000 young people. Sweet Love 
is a play and forum workshop developed by Futures 
Theatre Company which encourages students to 
improvise with actors to discuss, and find ways to tackle 
sexual bullying. In 2013 we will be renewing this support.

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
 
I am delighted with the performance of 
Swarovski at The Chimes, Uxbridge. 
Intu’s specialist knowledge and 
partnership approach has undoubtedly 
contributed to this success. 

David Shone, Swarovski

58

Intu Properties plc 2012 Annual ReportGovernance

In this section

60  Board of Directors
62  Executive management
63  Chairman’s introduction
64  Corporate governance report
74  Directors’ remuneration report
89  Directors’ report
92  Statement of Directors’ responsibilities

Case study 
Sector-leading innovation 
at The Chimes, Uxbridge

Our sector-leading innovation to direct 
leasing has proved highly successful in its 
first year at The Chimes, Uxbridge. The 
centre is now 100 per cent let with high 
profile new additions reinforcing its 
fashion credentials.

Following analysis and customer 
research to identify ‘destination’ brands, 
key retailers such as Swarovski and 
Office have joined our strong line-up 
demonstrating their confidence in 
the centre.

Also, H&M are to upsize by a third into a 
newly configured 23,000 sq. ft. unit over 
two levels which will enable them to 
showcase a larger range of their products.

In addition to creating this exciting tenant 
mix evolution, our specialist knowledge 
and relationships have eliminated third 
party letting fees in the order of 10 per 
cent of rent secured.

100%

Let at 31 December 2012

6

New brands introduced

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Governance

Board of Directors

Chairman, Deputy Chairman and Executive Directors

Patrick Burgess MBE
Chairman 
Age 68 

John Whittaker
Deputy Chairman 
Age 70 

David Fischel
Chief Executive 
Age 54 

Appointed to the Board: Appointed as a 
Non-Executive Director of the Group in 
2001 and Chairman on 1 August 2008. 

Appointed to the Board: Appointed as 
Deputy Chairman and a Non-Executive 
Director on 28 January 2011. 

Career: John Whittaker is the Chairman 
of the Peel Group which he founded in 
1971, and developed into a leading UK 
infrastructure, transport and real estate 
enterprise.

Skills and experience: John is a highly 
regarded real estate investor, and has 
overseen the growth of the Peel Group 
across many sectors such as land, 
real estate, ports, airports, renewable 
energy and media. John is an experienced 
property developer and business leader 
illustrated by projects such as The 
Trafford Centre and MediacityUK. His 
appointment to the Board followed the 
acquisition by Intu of The Trafford Centre 
from the Peel Group.

Other appointments: Chairman of the  
Peel Group.

Career: Patrick Burgess qualified as a 
Solicitor in 1972 and became a partner in 
Gouldens in 1974, serving as head of the 
Corporate Department for 14 years and 
as Senior Partner for six, culminating with 
the merger of Gouldens with Jones Day 
in 2003, from which he retired in 2007. 
He has also been active in a number of 
charitable and community organisations.

Skills and experience: At Jones Day,  
Patrick specialised in mergers and 
acquisitions and corporate re-structuring. 
He also has considerable experience 
in compliance, regulatory and stock 
exchange matters. 

Other appointments: Non-Executive 
Director of Standard Bank PLC

Chairman of the Capital  
Projects Committee

Chairman of the Nomination and 
Review Committee

Chairman of the Corporate  
Responsibility Committee

Appointed to the Board: Appointed  
Finance Director in 1988, Managing 
Director in 1992 and Chief Executive in 
March 2001.

Career: David Fischel qualified as a 
chartered accountant in 1983 at Touche 
Ross & Co before joining the Group 
in 1985. 

Skills and experience: At Touche Ross, 
David worked in the corporate finance 
department with experience in 
acquisitions, flotations and capital 
raisings. During his 27 year career with 
Intu, David has gained significant 
executive experience in numerous 
aspects of the shopping centre industry 
including shopping centre acquisitions 
and developments. He has also been 
closely involved with the Group’s 
corporate development including equity 
and debt financings and a wide range of 
other corporate transactions, including 
the 2010 demerger of Capital & Counties 
from Intu.

Other appointments: Non-Executive 
Director of Equity One, Inc and Prozone 
Capital Shopping Centres Limited.

Matthew Roberts
Finance Director 
Age 49 

Appointed to the Board: Appointed as 
Finance Director on 3 June 2010.

Career: Matthew Roberts was previously 
the Finance Director of Debenhams plc 
from 1996 to 2003, and Chief Financial 
Officer of Gala, subsequently Gala Coral 
Group Ltd, from 2004 to 2008.

Skills and experience: Matthew is a 
Fellow of the Institute of Chartered 
Accountants in England and Wales, and 
has gained significant executive level 
finance experience in his previous 
positions at Debenhams plc, where 
he managed its 1998 IPO and ran its 
international business and property 
function, and at Gala where he led a 
number of acquisitions and fundraisings 
including the creation of a £3 billion 
debt package following the acquisition 
of Coral.

Committees: 

 Executive Committee
 Capital Projects Committee
 Audit Committee
 Remuneration Committee 
 Nomination and Review Committee
 Corporate Responsibility Committee

60

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Non‑Executive Directors

John Abel
Age 68 

Richard Gordon
Age 54 

Andrew Huntley
Age 74 

Louise Patten
Age 59 

Appointed to the Board: Appointed as a 
Non-Executive Director in 2010.

Appointed to the Board: Appointed as a 
Non-Executive Director in May 2010. 

Appointed to the Board: Appointed as a 
Non-Executive Director on 8 July 2009. 

Career: John Abel commenced his career 
with Intu in 1972. Until his retirement in 
2005, John was Managing Director of 
Capital Shopping Centres PLC, and 
served as a Non-Executive Director 
from 2005 until 2008 before being 
reappointed to the Board following 
Intu’s demerger in 2010.

Skills and experience: John is a 
Chartered Surveyor and, through his 
career with the Group, has extensive and 
specific experience in the shopping centre 
industry, including in the acquisition and 
development of shopping centres.

Career: Richard Gordon previously 
served as a Non-Executive Director of 
Capital Shopping Centres PLC between 
1996 and 2006 and was appointed as an 
alternate Director in respect of Graeme 
Gordon’s directorship of the Group in 
2001. He also served on the boards of a 
number of companies within the Liberty 
Life group and various companies within 
the commercial and residential real 
estate sector.

Skills and experience: In addition to 
representing the Gordon Family Interests 
on the Board, Richard also has significant 
real estate experience having been 
involved with several commercial and 
residential real estate companies, mainly 
in South Africa.

Career: Andrew Huntley’s career 
commenced some 40 years ago with 
Richard Ellis where he served as 
Chairman from 1993 until 2002. He was 
a Non-Executive Director of Pillar 
Property plc from 2000 to 2005.

Skills and experience: Andrew Huntley is 
a Chartered Surveyor and is one of the 
UK’s most experienced property advisers.

Other appointments: Non-Executive 
Chairman of Metric Property Investments 
PLC and a Non-Executive Director of 
Capital & Counties Properties PLC.

Appointed to the Board: Appointed as a 
Non-Executive Director on 22 September 
2011. 

Career: Louise Patten began her career 
at Citibank, working mainly in retail 
financial services until she joined global 
strategy advisers Bain & Company Inc in 
1993 where since 1997 she has been a 
Senior Adviser.

Skills and experience: Louise Patten has 
extensive board level experience at a 
number of retail and property companies 
including as Chairman of Brixton plc and 
Interim Chairman of Somerfield plc, and 
Non-Executive roles at Marks and 
Spencer plc, where she chaired the 
Remuneration Committee, GUS plc, 
Hilton Group plc and Harveys 
Furnishings plc.

Other appointments: Non-Executive 
director of UK Asset Resolution and of 
Control Risks Group.

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Senior Independent Director 
Age 63 

Appointed to the Board: Appointed as a 
Non-Executive Director in 2004. 

Career: Rob Rowley joined Reuters 
Group plc in 1978, and served as Finance 
Director from 1990 to 2000. He has 
previously been Executive Deputy 
Chairman of Cable & Wireless plc, and a 
Non-Executive Director and Senior 
Independent Director of Prudential plc 
and Taylor Nelson Sofres.

Skills and experience: Rob Rowley is a 
qualified accountant, has an MBA from 
Cranfield Business School, and has 
gained extensive financial experience 
throughout his career. Rob also has wide 
Audit Committee experience having 
chaired the Audit Committee of 
Prudential plc, and currently chairing the 
Audit Committees of Taylor Wimpey plc 
and Moneysupermarket.com Group PLC. 

Other appointments: Non-Executive 
Director of Taylor Wimpey plc, and 
Moneysupermarket.com Group PLC.

Chairman of the Audit Committee

Neil Sachdev
Age 54 

Andrew Strang
Age 60 

Adèle Anderson
Age 47 

Appointed to the Board: Appointed as a 
Non-Executive Director in November 
2006. 

Career: Neil Sachdev joined Tesco PLC  
in 1978, rising to the position of Property 
Director before joining J Sainsbury PLC as 
Commercial Director in March 2007. He 
was subsequently appointed Property 
Director of J Sainsbury PLC in June 2010.

Skills and experience: Neil Sachdev has 
an MBA from Stirling University and has 
gained significant experience in both 
retail and property matters throughout 
his career. 

Other appointments: He was appointed 
to the Joint Advisory Board of the 
Grantham Institute for Climate Change in 
2010. Since 2008 has been a member of 
the Business in the Community Mayday 
Leadership team focusing on the climate 
change sector and is also a member of 
the Business Innovation and Skills Board 
on Green Construction. Chairman of the 
Institute of Grocery Distribution.

Chairman of the Remuneration 
Committee

Appointed to the Board: Appointed as a 
Non-Executive Director on 8 July 2009. 

Career: Andrew Strang started his career 
with Richard Ellis 30 years ago. He served 
as Managing Director of Threadneedle 
Property Investments Limited for 17 
years until January 2008. He was 
Chairman of Hermes Real Estate 
Investment Management from 2009 to 
2011. He is a current member of the 
Norges Bank Investment Management 
Real Estate Advisory Board and a 
member of the Investment and 
Governance Committees at AEW UK.

Skills and experience: Andrew is 
a Chartered Surveyor and has 
substantially focused on property 
investment throughout his career. 

Other appointments: Director of  
the British Property Federation and a 
Non-Executive Director of Capital & 
Counties Properties PLC. 

Appointed to the Board: Appointed as 
a Non-Executive Director on 22 February 
2013.

Career: Adèle Anderson commenced 
her career at KPMG where she became 
a partner and held a number of senior 
roles, including Chief Financial Officer. 
She is currently Chairman of the 
Audit Committee of Save the Children 
International; a member of the easyJet 
plc Audit Committee and will serve on 
the Intu Audit Committee.

Skills and Experience: Adèle graduated 
from Kent University with BSc Hons in 
Mathematics and Computer Science. 
She is a qualified ACA. She has 
gained extensive financial experience 
throughout her career and has significant 
Audit Committee experience.

Other appointments: Non-Executive 
Director of easyJet plc; a member of 
the Board of Trustees of both Save the 
Children UK and Save the Children 
International and a member of the 
Independent Commission on the 
Future of Policing.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
 
 
 
 
Governance continued

Executive management

Executive Committee*

*  Additional members of the Executive 
Committee are the Chief Executive 
(Chairman of the Committee) and the 
Finance Director, whose biographies are 
set out on page 60.

Mike Butterworth
Chief Operating Officer 

Susan Marsden
Group Company Secretary

Joined the Group as Company 
Secretary in 2000. Fellow of the 
Institute of Chartered Secretaries and 
Administrators. Commenced her career 
at the London Stock Exchange, and has 
been Company Secretary of two FTSE 
real-estate sector companies prior to 
joining the Group.

Trevor Pereira
Commercial Director

Joined the Group in 2007 as Commercial 
Director, Capital Shopping Centres PLC. 
He was appointed Group Commerical 
Director in October 2011, responsible 
for Operations, Commercialisation and 
Marketing. Previously worked for airport 
group BAA plc for 21 years, latterly as 
Retail and Commercial Director for 
Heathrow Airport.

Peter Weir
Group Financial Controller

Joined the Group in October 2008 as 
Group Financial Controller. Previously 
worked in a number of finance roles in  
both listed and privately owned 
companies, lastly before joining the 
Group as Finance Director-Europe 
at Fidelity International. A member 
of ICAS. 

Appointed as Chief Operating Officer on 
3 October 2011. A Fellow of the Royal 
Institution of Chartered Surveyors, 
Mike joined the Manchester Ship Canal 
Company, now part of the Peel Group, in 
1981, and became Property Director of 
Peel Holdings in 2002. He has extensive 
experience in the shopping centre 
industry having served as Managing 
Director of The Trafford Centre Limited 
from 1996, responsible for the opening of 
the centre in 1998, until 2011 when The 
Trafford Centre was acquired by Intu.

Martin Ellis
Construction Director

Appointed as a Director of Capital 
Shopping Centres PLC on 1 October 
2005. Initially joined the Group in 
1990 and was appointed in 2008 as 
Managing Director, Liberty International 
Construction and Development Limited. 
Following the demerger of the Capital & 
Counties business in May 2010, 
he reverted to being Intu’s Construction 
Director responsible for development and 
construction projects.

Hugh Ford
General Corporate Counsel

Appointed General Corporate Counsel 
to the Group in 2003. Previously he was 
General Manager Legal at Virgin Atlantic 
Airways, and before that a commercial 
lawyer with British Airways Plc. He 
qualified as a solicitor in 1992 with 
Freshfields.

Executive management

Biographies of the senior management team are available on our website at:  
intugroup.co.uk/who-we-are/our-people/executive-management/

62

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Introduction by  
the Chairman of the Board

Patrick Burgess

Dear Shareholder,

I am pleased to introduce our Corporate governance report for the year. 

2012 has been another year of considerable progress for the Group, 
with the Board’s strategic plans being delivered through a number 
of transactions and large projects including:

•	Acquisition of KGV Docks (West) and an option to buy land in Malaga, 

Spain from the Peel Group and associated shareholder meeting

•	Issue of a £300m Convertible Bond in October 2012

•	Sale of shares in Equity One, Inc.

•	Acquisition of units at the Centaurus Retail Park adjacent to the 

Mall at Cribbs Causeway

•	Acquisition of Capital & Regional’s 50 per cent interest in 

Xscape, Braehead

•	Acquisition of StyleMeTV

Through the work of the Nomination and Review Committee, and 
the Board as a whole, we regularly review our performance (notably 
through the formal annual performance evaluation process) and the 
balance of skills and experience among our Directors as well as their 
independence. Following the decisions of John Abel and Rob Rowley 
to step down as Non-Executive Directors (at the 2013 AGM and at 
the end of the year respectively), we announced the appointment of 
Adèle Anderson on 22 February 2013 as an additional Non-Executive 
Director and member of the Audit Committee. Adèle’s appointment, 
the result of a formal appointment procedure, supports our 
commitment to diversification in the boardroom whilst ensuring that 
we appoint only the best candidate for the role. The new appointment 
demonstrates the effectiveness of the Nomination and Review 
Committee’s succession planning process and ensures our continued 
compliance with the independence requirements of the Code. 

•	Re-branding project – a £25 million investment to create a 

nationwide consumer-facing shopping centre brand, intu, and a 
transformed digital proposition (including the installation of a new 
fibre optic network for every centre, the provision of free WiFi 
throughout the malls and the launch, in spring 2013, of intu.co.uk, 
a transactional, fashion-focused, mobile-enabled website) 

On behalf of the Board, I would like to express our sincere 
appreciation to John and Rob who have each made a significant 
contribution to the Board over the tenure of their appointments, 
and I am pleased that Rob will remain on the Board until the end 
of 2013 to ensure a smooth handover of his responsibilities as 
Audit Committee Chairman to Adèle Anderson.

•	Implementation of a new Board Protocol to deal with related 

party issues

•	Overhaul of the Group remuneration policy and associated large 

shareholder consultation.

I believe that the principles of good corporate governance have 
underpinned the Board’s discussions relating to all these 
transactions and projects and have underpinned the Board’s 
deliberations generally.

The Board has operated effectively throughout the year and it is my 
role as Chairman to ensure that Board meetings provide a forum for 
constructive debate, with the best interests of the Company and its 
shareholders at its core. We endeavour to ensure wherever possible, 
recognising that there are occasions where meetings must by their 
nature be convened at short notice, that all of our Directors can and 
do attend all Board and Committee meetings having had sufficient 
time to digest the matters to be discussed in order that they can 
contribute effectively to the debate, providing constructive challenge 
and comment and bringing to bear a depth of independent views 
developed from a range of business backgrounds and experience.

The Audit Committee, and the Board as a whole, are aiming to adopt 
the new requirements of Section C of the Code, during the course of 
2013. The new requirements largely relate to additional measures to 
assure the integrity of the Annual Report. 

I believe that our approach to good governance is robust 
and effective and that the procedures adopted and followed by 
the Board (as further described in the following report) ensure that 
good governance remains at the forefront of our concerns and at 
the heart of our management at all stages of our deliberations. 
I am pleased to confirm that Intu has complied in full with the 2010 
UK Corporate Governance Code during 2012. 

Patrick Burgess 
Chairman

27 February 2013

Compliance Statement

Compliance with the UK Corporate Governance Code:
The Company has, throughout the year ended 31 December 2012, complied with all provisions of the 2010 edition of the UK Corporate Governance Code. 

Compliance with the Disclosure and Transparency Rules:
The disclosures required under DTR 7.2 of the Disclosure and Transparency Rules are contained in this report, except for those required under DTR 7.2.6 
which are contained in the Directors’ report.

Intu Properties plc 2012 Annual Report

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Governance continued

Leadership

Governance structure – Role and responsibilities

The Board

Audit Committee*

Remuneration Committee*

Nomination and Review Committee*

Chairman
Rob Rowley

Members
Adèle Anderson
Neil Sachdev
Andrew Strang

Chairman
Neil Sachdev

Members
Louise Patten
Rob Rowley

Key responsibilities
Monitoring the integrity 
of financial statements, 
internal controls and risk 
management process and 
reviewing the effectiveness 
of the internal and external 
auditors.

More information
Audit Committee report – 
pages 68 to 70.

Key responsibilities
Setting remuneration policy 
for all Executive Directors 
and the Chairman and 
recommending and 
monitoring the level and 
structure of remuneration 
for senior management.

More information
Directors’ remuneration 
report – pages 74 to 88.

Chairman
Patrick Burgess

Members
Rob Rowley
Neil Sachdev

Key responsibilities
To ensure that the Board is 
comprised of individuals 
with an appropriate balance 
of skills, knowledge and 
experience.

More information
Nomination Committee 
Report – pages 72 and 73.

Executive Committee

Chairman
David Fischel

Members
Matthew Roberts
Mike Butterworth
Trevor Pereira
Martin Ellis
Hugh Ford
Peter Weir
Susan Marsden

Key responsibilities
Considers investment proposals, reviews progress on 
projects and project expenditure in detail and receives 
updates on other business matters. Has delegated 
authority, within limits, to authorise initiatives and 
expenditure.

Meets fortnightly

CR Committee

Chairman
Patrick Burgess

Members
David Fischel
Alexander Nicoll  
(CR Director)
Jennifer Sandars  
(CR Manager)

Key responsibilities
Oversee the management of the Group’s Corporate 
Responsibility activities.

Number of meetings in 2012
Three.

More information
CR Report – pages 51 to 57.

Capital Projects Committee

Chairman
Patrick Burgess

Members
John Whittaker
David Fischel
Matthew Roberts
Mike Butterworth
Martin Ellis

Key responsibilities
Reviews new project and project expenditure in detail 
and, as appropriate, comments on certain projects for the 
Board. Has no power to approve proposals or authorise 
expenditure.

The Capital Projects Committee is not a formal 
committee of the Board.

*  Terms of reference of the Audit, 

Remuneration and Nomination and 
Review Committees are available on 
the Company’s website.

The Board
Led by the Chairman, the Board’s overarching objectives are 
to provide effective leadership to the Group and ensure the 
delivery of long-term sustainable returns for its shareholders. 
It does this by setting and implementing strategy, ensuring that 
its employees are professional, motivated and focused, and 
establishing a balanced approach to risk within the framework 
of established controls.

Appropriate and effective corporate governance is taken extremely 
seriously and is intrinsic to all aspects of the Board’s activities. The 
Board is accountable to the Company’s shareholders and other 
stakeholders for the good conduct of the Company’s affairs. It has 
therefore established a governance framework which underpins 
the culture of the Group. This framework consists of committees 
with specific delegated responsibilities (as shown in the diagram 
above), and internal policies, procedures and controls (including 
delegated authority limits) which are regularly reported on, 

reviewed and updated by the Board and the relevant Board 
Committees. The internal processes are communicated to all staff 
and are available at all times on the Group’s intranet. Delegated 
authority limits apply at all levels of the business and their 
application is incorporated into the standard procedures for the 
execution of all leases, licences, contracts and other relevant 
documentation by the Group. The Board considers that the way in 
which both the Board and the Group function meets the highest 
standards of accountability and probity.

The Company’s approach to corporate responsibility is a key 
element of its overall governance culture. We have consistently 
demonstrated a strong commitment to high standards of 
corporate responsibility, particularly focused on the local 
communities surrounding our shopping centres and details of 
our CR activities are set out in the CR review on pages 51 to 57, 
which we strongly recommend shareholders to read, and on the 
Company’s website.

64

Intu Properties plc 2012 Annual ReportMatters reserved for the Board
Responsibility for the day-to-day management of the Group is 
delegated to certain Board Committees, the Executive Directors 
(with the support of the Chief Operating Officer) and senior 
management. These delegated powers are supported by 
delegated authority limits which are documented and kept 
under review by the Board.

Certain matters have been reserved for decision by the whole 
Board and a schedule setting out a list of these is reviewed 
regularly. These include, but are not limited to:

•	Strategy

•	The application of the Board protocol for dealing with 

related-party matters

•	Dividend policy

•	Major acquisitions and disposals, other capital expenditure 

and controls

•	Risk management

•	Shareholder circulars and other documents required by the 

listing rules

The Board also receives regular reports on the proceedings of 
its Committees and considers their recommendations. It has 
been the Board’s custom over many years to ensure that major 
decisions are taken after a reiterative process which involves 
examination and review at several levels. In part, this 
examination and review process is dealt with by the Board and 
other Committees mentioned below.

Structure of the Board and independence
At the year end, the Board comprised the Chairman, Patrick 
Burgess, two Executive and eight Non-Executive Directors. 

The Chairman & Chief Executive
The roles of the Chairman, Patrick Burgess, and of the Chief 
Executive, David Fischel, are separate and have been defined 
by the Board. In summary, the Chairman’s responsibilities 
include leading the Board, setting its agenda and ensuring its 
effectiveness on all aspects of its role. He also ensures that the 
Board maintains effective communication with shareholders 
and management. The Chief Executive’s key responsibilities 
include day-to-day management of the Group’s operations in 
the most effective way possible, implementing the policies and 
strategies developed by the Board and developing the abilities 
and skills of the Group’s personnel to the maximum potential.

Non‑Executive Directors
The Non-Executive Directors bring an external and independent 
view to the Board’s discussions, providing constructive challenge 
to executive management when appropriate.

Biographical details of each Director are set out on pages 60 
and 61.

The Senior Independent Director
Rob Rowley was appointed as Senior Independent Director 
in September 2008. In this role, Rob provides advice and 
additional support and experience to the Chairman as required, 
and is available to act as an intermediary for the other 
Directors if necessary. Rob Rowley also leads the appraisal of 
the Chairman’s performance annually in discussion with the 
other Non-Executive Directors, and is available as an additional 
point of contact for shareholders should they feel that 
communication through the normal channels of the Chairman, 
Chief Executive, Secretariat or Investor Relations team has 
failed or is otherwise inappropriate.

Rob Rowley will step down as a Non-Executive Director (and as 
Chairman of the Audit Committee and Senior Independent 
Director) towards the end of 2013 and the announcement of 
his successor as Senior Independent Director will be made in 
due course.

Board structure at year end

Board independence (exc. Chairman) at year end

Chairman

Executive

Non- Executives

Men

Women

1

2

8

10

1

Gender split at year end

Executive

Non-independent NED

Independent NED

Length of tenure of NEDs at year end

0 – 3 years

3 – 6 years

6 – 9 years

Over 9 years

2

3

5

6

0

2

0

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Governance continued

Alternate Directors
John Whittaker and Richard Gordon have appointed Steven Underwood and Raymond Fine respectively as their alternates 
under the terms of the Company’s Articles of Association. The Board has generally invited the alternate Directors to attend 
Board meetings.

Board meetings
There were four scheduled Board meetings and three additional Board meetings in the year including a Directors’ Away Day focused 
on plans and strategy for 2013. Some of the additional meetings were necessarily convened at short notice to deal with matters 
arising between scheduled meetings. 

At each scheduled meeting, the Executive Directors, Chief Operating Officer and Company Secretary give reports on their key 
areas of responsibility. In addition, the chairmen of the Audit, Remuneration and Nomination and Review Committees give an 
update on the discussions of those Committees, highlighting any areas requiring escalation to, or consideration by, the full Board. 
Other matters for discussion are added to the agenda for scheduled Board meetings, or discussed at additional Board meetings, 
as required.

In addition to routine recurring items including strategy, financial reporting and risk management, key matters discussed by the 
Board in 2012 were those set out in my introduction on page 63.

The attendance of Directors at all Board and Committee meetings held in 2012 is set out in the table below:

D.P.H. Burgess

D.A. Fischel

E.M.G. Roberts

J. Whittaker

J.G. Abel

R.M. Gordon
I.J. Henderson3
A.J.M. Huntley

Lady Patten

R.O. Rowley

N. Sachdev

A.D. Strang

7/7

7/7

7/7

7/7

7/7

6/7

3/7

7/7

7/7

6/7

6/7

6/7

Board

Audit 
Committee1 

Remuneration 
Committee2 

Nomination and 
Review 
Committee 

Capital Projects 
Committee 

Corporate 
Responsibility 
Board 
Committee 

3/3

3/3

1/1

4/4

4/4

4/4

4/4

1/1

3/4

1/3

6/7

7/7

7/7

1/1

1/1

4/4

3/4

4/4

1 The Audit Committee normally invites the Chairman, Chief Executive and Finance Director to attend meetings and they attended all four meetings of the 

Committee in 2012.

2 There were three scheduled meetings, and four additional meetings of the Remuneration Committee in 2012. The Committee normally invites the Chairman 

and the Chief Executive to attend the scheduled meetings and they attended all three scheduled meetings in 2012.

3 Retired as a Director and member of the CR Committee on 25 April 2012. Appointed as a member of the Capital Projects Committee on 2 May 2012.

Communication between Board meetings
Directors are kept fully informed of progress on matters between formal meetings by way of regular scheduled updates by 
conference call, ad hoc meetings and other communications on a regular basis. There are a number of important Committee 
meetings between Board meetings and these are normally fully attended. The Chairman and Executive Directors regularly contact 
the Non-Executive Directors to discuss specific matters, typically of a strategic nature. There are regular informal meetings with the 
Non-Executive Directors, and on more than one occasion the Chairman met the Non-Executive Directors during 2012 without the 
Executive Directors being present.

The Chairman of the Audit Committee, Rob Rowley, holds regular meetings with the Head of Risk and Internal Audit, to monitor and 
progress matters between scheduled Audit Committee meetings. Mr Rowley also meets the Chairman, Chief Executive and Finance 
Director between Board meetings.

The Chairman of the Remuneration Committee, Neil Sachdev, holds frequent discussions with the Chief Executive and the Company 
Secretary and our advisers to progress remuneration matters between scheduled Remuneration Committee meetings.

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Intu Properties plc 2012 Annual ReportEffectiveness

Balance, Composition and Culture
The Nomination and Review Committee regularly reviews the balance (including skills and experience) and composition of the 
Board to ensure that it operates efficiently. The Board has therefore determined that candidates for the role of Non-Executive 
Director should have relevant qualifications and experience notably in property, retail, finance and legal, areas that are well 
represented by the current Non-Executive Directors (see biographies on page 61).

The appropriate balance of skills, independence, experience and knowledge does not in itself ensure the efficient operation of a 
Board. To this end, the role of the Chairman is essential in creating an environment where the Non-Executive Directors are able to 
draw on their own experience to constructively challenge the views of the executive management. The Chairman works closely with 
the Company Secretary to ensure that all Directors are provided with fully accurate and timely information to facilitate informed 
discussion at Board meetings. The Chairman is particularly mindful that the views of all Directors should be taken into consideration 
and that the range of experience of our Non-Executive Directors must be drawn upon to provide insight and alternative 
perspectives to aid the Board’s decisions on key strategic matters.

The table below shows the balance on the Board between independent and non-independent Directors during 2012:

David Fischel (Executive Director)
Matthew Roberts (Executive Director)
John Whittaker (major shareholder)
John Abel (former Executive Director)
Richard Gordon (major shareholder)
Andrew Huntley
Louise Patten
Rob Rowley
Neil Sachdev
Andrew Strang
Total

Independent in opinion of Board

Non-Independent in opinion of Board











5

5

The balance of independent and non-independent Directors on the Board following the AGM when John Abel will step down, and 
later in the year when Rob Rowley steps down, is illustrated by the following charts which show that the Board will continue to 
satisfy the independence criteria of the code throughout 2013:

Post AGM

Post Rob Rowley step down

Independent

Non-independent

6

4

Independent

Non-independent

5

4

Time commitment 
Non-Executive Directors are generally appointed for a three-year period and their continuing service thereafter is subject to review 
by the Board. Their annual time commitment will vary according to their membership of Board Committees and the activities of 
the business in any given year. The terms of appointment of the Non-Executive Directors set out the minimum expectation of 
preparation for and attendance at all Board meetings, Board Committee meetings where appropriate, ad-hoc meetings and the 
annual Board ‘Away Day’. Non-Executive Directors are required to confirm on accepting their appointment, and annually following 
each accounting year end, that they are able to allocate sufficient time to meet the expectations of the role. 

The terms of appointment for each of the Non-Executive Directors are available for inspection at the Company’s registered office, 
or on written request from the Company Secretary.

Directors’ conflicts of interest
The Board has adopted a formal procedure for the identification of conflicts under which Directors must notify the Chairman of 
any potential conflicts. The Chairman then decides whether a conflict exists and recommends its authorisation by the Board where 
appropriate. In certain circumstances, the conflicted Director may be required to recuse himself from the Board’s discussions on 
a matter in which he or she is conflicted.

The Board implemented a new ‘Related Party Protocol’ for situations where a proposed transaction could be captured by the 
related party provisions of the Listing Rules or by the Companies Act 2006. The Protocol was established prior to the Company’s 
transactions with the Peel Group (of which John Whittaker is Chairman) in early 2012, and any amendment to the Protocol is a 
matter reserved for the full Board. The Protocol will be observed fully for any future transactions which involve a related party.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Governance continued

Audit Committee

Chairman 
Rob Rowley* (Independent Non-Executive Director)

Members 
Neil Sachdev (Independent Non-Executive Director) 
Andrew Strang (Independent Non-Executive Director) 
Adèle Anderson† (Independent Non-Executive Director)

Number of meetings in 2012 Four

Key responsibilities 
The Audit Committee is responsible for monitoring and reviewing:

•	The integrity of the financial statements, including a review 

of the significant financial reporting judgements and 
accounting policies

•	The effectiveness of the Group’s internal control and risk 

management

•	The effectiveness of the internal audit function, including 

the work programme undertaken by the function

•	The Group’s policy on whistleblowing

Accountability

Responsibilities
In addition to its key responsibilities, the Audit Committee also 
considered the following matters in 2012:

•	The 2012 Internal Audit Plan and Audit Charter

•	Accounting for exceptional items in the 2012 Annual Report

•	The accounting treatment of specific transactions in the year 

including the acquisitions of KGV Docks (West) and the option to 
acquire land in Malaga, Spain, and the impact of the demerger of 
Prozone from Provogue on the Group’s Indian interests

•	The use of the external auditors for non-audit services

•	Strategic options for the Group’s IT and communications 

infrastructure

•	Feedback on its participation in a review of the UK Corporate 
Governance Code and in particular Patrick Burgess’ meeting 
with the FRC

•	The principals of the FRC’s discussion paper ‘Cutting Clutter – 

Combating Clutter in Annual Reports’

68

•	The Group’s overall approach to monitoring areas of risk

•	The Company’s relationship with the external auditor, 

including its independence

“I am pleased to report that the Company has complied in 
full with the 2010 UK Corporate Governance Code 
throughout the year and has to a large extent adopted the 
provisions introduced in the new and revised Code published 
in September 2012. It is intended that procedures will be 
introduced during 2013 to address the additional obligations 
placed on the Board and Audit Committee by the revised 
provisions of section C of the Code relating to ensuring the 
integrity of the Annual Report and Accounts and we expect 
to report the successful adoption of such procedures in our 
2013 Annual Report.

I am pleased to confirm that the Board has appointed Adèle 
Anderson as a Non-Executive Director and member of the 
Audit Committee. Adèle will succeed me as Chairman of the 
Audit Committee when I step down later this year and I look 
forward to working with her to ensure a smooth and effective 
handover of responsibilities.”

* 

 The Board considers that Rob Rowley, as a qualified accountant with 
considerable experience of chairing audit committees, has significant 
recent and relevant financial experience, as required by the UK 
Corporate Governance Code. The Board also considers that Adèle 
Anderson, ACA, also has significant and relevant financial experience.

† 

 Adèle Anderson was appointed as a member of the Committee 
on 22 February 2013 and will take up the role of Chairman of the 
Committee when Rob Rowley steps down towards the end of the year.

External auditor
The Audit Committee has assessed the effectiveness of the 
external auditor, PricewaterhouseCoopers LLP, and audit process 
on the basis of meetings with finance, internal audit staff and other 
Senior Executives. In reviewing the independence of the external 
auditor, the Audit Committee considered a number of factors, 
including the experience and tenure of the external auditor; the 
nature and level of services provided by the external auditor; and 
confirmation from the external auditor that it has remained in 
compliance with relevant UK independence standards. 

The Audit Committee has also considered the new element of  
provision C.3.7 of the 2012 UK Corporate Governance Code that 
FTSE 350 companies should put the external contract out to 
tender at least every ten years. PricewaterhouseCoopers LLP has 
been the Company’s audit firm since 1998 and during this period 
its effectiveness and independence has been annually assessed by 
the Audit Committee which has not considered it necessary to 
require the firm to tender for the audit work. The external auditors 
are required to rotate the audit partner responsible for the Group 
and subsidiary audits every five years, and the current audit partner 
took responsibility for the Group and subsidiary audits from the 
year ended 31 December 2011.

Intu Properties plc 2012 Annual ReportHaving concluded that PricewaterhouseCoopers LLP 
remain effective and independent, the Audit Committee 
has recommended to the Board that they be reappointed 
as external auditor for the year ended 31 December 2013. 
The Audit Committee has noted provision C.3.7 and has 
concluded that the audit contract will be put out to tender 
at an appropriate time in compliance with the transitional 
arrangements provided for by the FRC.

Key financial reporting and significant judgements
During the year the Committee discussed the planning, 
progress and final conclusions of the external audit 
process. The audit plan was reviewed and approved at the 
May 2012 committee meeting. The significant risks areas 
identified were: investment property valuations; net rental 
income; and management override of controls. These issues 
were discussed by the Committee following finalisation of 
the year end audit.

The Committee seeks support from the external auditor in 
understanding and assessing whether suitable accounting 
policies have been adopted and whether management has 
made appropriate estimates and judgements. The main issues 
discussed by the Committee in the current year were:

•	For both the interim results at 30 June 2012 and the audited 
results included in this Report the Committee reviewed and 
discussed with management and the auditors the key 
assumptions and results of the valuation process undertaken 
by the professionally qualified third party valuers

•	The Company’s ‘going concern’ reviews with the main areas 
of focus being the Group’s debt maturity profile and stress 
testing the forecast for reductions in property valuations and 
rental income

•	The accounting treatment adopted for the £300 million 
2.5 per cent convertible bond issued in October 2012

•	The accounting treatment for the demerger of Prozone and 
the results of an impairment review that was undertaken as 
the share price of the listed shares was below the carrying 
value at 31 December 2012. The review concluded that no 
impairment was required at this time

•	The results of an impairment review undertaken by 

management, that resulted in the impairment of the goodwill 
arising on the Broadmarsh acquisition

•	Classification of exceptional items for the purposes of 

calculating underlying earnings

•	The auditors also reported that no material misstatements 

remain unadjusted in the financial statements

Following discussions with management both the Committee 
and the external auditor agreed with the conclusions reached 
and the treatments relating to the above issues adopted in 
these financial statements.

Non‑audit services
The Company has a policy to ensure that the provision of any 
non-audit services by the incumbent external auditor does not 
impair the external auditor’s independence or objectivity. The 
term ‘non-audit services’ does not include reference to any 
advice on tax. The Audit Committee has delegated to the 

Executive Directors the authority to contract for non-audit 
services with the external auditor subject to observing the 
following guidelines:

(a) Executive Directors have the authority to commission the 

external auditors to undertake non-audit work where this is in 
relation to a specific project with a cost not exceeding the lower 
of £50,000 or 15 per cent of the estimated annual level of the 
auditor’s fees for the time being. If the cost is likely to exceed the 
limits mentioned above, the agreement of the Chairman of the 
Audit Committee is required before the work is commissioned;

(b) when the external auditor is considered for the provision of 

non-audit work, the Executive Directors must consider whether 
the proposed arrangements will maintain audit independence; 

(c) the external auditor must certify to the Company that it is 
acting independently and the Audit Committee or the 
commissioning Director (as applicable) must be satisfied that 
such is the case; and 

(d) in providing a non-audit service, the external auditor should not:

(i)  audit their own work

(ii)  make management decisions

(iii)  create a mutuality of interest

(iv) find they have placed themselves in the role of advocate 

for the Company.

Details of the amounts paid to the external auditor for audit and 
non-audit services are included in note 11 on page 107 to the 
financial statements. The Company engaged 
PricewaterhouseCoopers LLP to carry out certain non-audit 
work in 2012 including assurance services in respect of the 
Group’s 2012 interim report and the provision of audit 
certificates in relation to head lease calculations. The above 
safeguards were adhered to when awarding the non-audit work. 
Fees paid to PricewaterhouseCoopers in respect of non-audit 
work represented 24.2 per cent of the total fees paid.

The Audit Committee has considered the option of putting 
material non-audit work out to tender. While recognising that 
the circumstances of a particular transaction may make it 
inappropriate to use a firm other than the incumbent external 
auditor for such work (for example where the nature of the 
transaction would not allow a new firm sufficient time to 
assimilate the requisite knowledge of the Company’s operations 
in order to carry out the non-audit work), the Audit Committee 
has recommended that non-audit work should be put to tender 
wherever possible. 

Risk management and internal control
The Board has overall responsibility to oversee the Group’s system of 
internal control and to keep its effectiveness under review, as well as 
to determine the nature and extent of the risks it is willing to take in 
achieving its strategic objectives. The ongoing risk management 
process is described in detail on page 27 and is designed to manage, 
rather than eliminate, the risk of failure to achieve business objectives 
and can provide only a reasonable, rather than absolute, assurance 
against material misstatement or loss. 

The Group has a risk and internal audit function which reports to 
the Audit Committee. The risk and internal audit function carries 
out an annual review of internal controls, which includes a 

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Governance continued

group-wide certification that effective internal controls are in place 
and are being operated effectively. The Head of Risk and Internal 
Audit carries out a programme of verification of the certification 
and reports the results to the Audit Committee, which in turn 
reports to the Board. The most significant areas addressed in 2012 
were: shopping centre reviews of the Trafford Centre and Eldon 
Square, review of joint venture operations, lease system data 
integrity, employee starters and leavers process, and Bribery Act 
compliance review. The Audit Committee regularly reviews the 
effectiveness of the risk and internal audit function and in 
particular ensures that the function remains sufficiently 
independent of the wider business to ensure it can carry out its 
work effectively.

Key elements of the Group’s internal control system (including 
financial controls) are as follows:

•	Financial information  

The Group has a comprehensive system for reporting financial 
results to the Board; detailed regular financial reports with 
comparisons to prior year/historic performance and against 
budget are provided to the Board. The Board reviews these for 
the Group as a whole and takes action when appropriate.

•	Financial reporting process  

The Group undertakes a detailed financial reporting process on a 
quarterly basis. This process is carried out using the policies and 
practices that apply to the control environment on an ongoing basis, 
and is largely undertaken by the Group’s financial reporting team, 
which comprises appropriately qualified finance professionals. 
Detailed planning is undertaken prior to the period end. As part of 
this process, significant business risks and their potential impact on 
the financial reporting process and results are considered, including 
the effect of any changes in the business activities or accounting 
standards and matters arising from the underlying information 
systems. The preparation of the consolidated financial results 
involves a number of review stages. One of these stages includes a 
technical accounting review by an internal technical specialist, who 
has primary responsibility for ensuring that financial accounting 
developments are appropriately dealt with in the Group’s financial 
reporting process. After various internal review stages, draft financial 
reports, with narrative commentary on new technical requirements 
or issues requiring a significant level of judgement, are prepared for 
review and approval by the Audit Committee. This review stage 
involves the Audit Committee discussing the consolidated financial 
results and significant judgements with senior management and, 
where appropriate, the external auditor.

•	Board authority limits  

The Board has adopted formal authority limits throughout 
the Group, which are supported by a formal procedure for 
the execution of transaction documents overseen by the 
Secretariat. Projects or expenditure with a value in excess 
of £5 million are submitted for approval to the Board. 
There are also authority limits in place which relate to 
treasury management.

•	Major investments  

•	Group treasury  

The Group has a centralised treasury function which reports 
to the Board on a regular basis. The reports provide details of 
counterparties, interest rate and foreign exchange risks and 
derivatives. Additional information on this subject is given in note 
35 on pages 121 to 126. The treasury function also monitors 
compliance against covenants set out under various 
financing arrangements.

•	Financial controls  

Key controls over major financial risks include reviews against 
performance indicators and exception reporting. Members of the 
executive management make regular assessments of their own 
department’s exposure to major financial risks and the extent to 
which these risks are controlled. These assessments are 
considered and reviewed by the Audit Committee and the Board, 
and by regular internal audit visits.

•	Anti-bribery and anti-corruption 

In 2011, the Board updated the Group’s Business Code of 
Practice, Code of Professional Conduct and Whistleblowing policy 
to reinforce the Company’s zero tolerance approach to acts of 
bribery or corruption. Senior management and other staff 
received training on the new policies and measures introduced 
as a result of the Bribery Act 2010 and procedures are in place 
to ensure that new staff are trained where appropriate and 
that refresher training is provided to relevant staff if necessary. 
The Group’s anti-bribery and anti-corruption policies and 
procedures are reviewed as part of the regular internal audit plan.

The Board has conducted a review of the effectiveness, on the 
basis of criteria set out in the 2005 Financial Reporting Council’s 
internal control guidance for Directors, of systems of internal 
financial control and risk management for the year ended 
31 December 2012 and has confirmed that there have been no 
material developments affecting their review which have taken 
place since the year end.

Whistleblowing policy
The Audit Committee reviews the Group’s arrangements by which 
staff can confidentially raise concerns about possible improprieties 
(whether financial or otherwise) within the Group. A confidential 
whistleblowing dedicated phone line is available to all staff 
throughout the Group, along with a procedure to record and 
monitor any incidents of whistleblowing which may occur. Any 
whistleblowing incidents are reported to the Audit Committee. 
There were no whistleblowing incidents during 2012. The policy 
and procedures are being reviewed by the Audit Committee in 
early 2013 to ensure that they meet current best practice and to 
increase staff awareness of the policy and procedures.

Going concern
The Company’s statement on going concern is set out in the 
notes to the accounts on page 102.

All major investments of the Group, whether in the ordinary 
course of business or of an exceptional nature, are reviewed by at 
least one Committee and by the Board itself before being 
authorised and implemented.

Rob Rowley 
Chairman of the Audit Committee

27 February 2013

70

Intu Properties plc 2012 Annual Report•	Investor conferences: Several investment banks hold 

conferences for investors and companies in the real estate 
sector. They are a good opportunity for the executive team 
to meet a large number of current and potential investors 
in a mixture of group and one-to-one meetings and 
informally. Intu attended seven such conferences in 2012 in 
the UK, Europe and the US. 

•	General meetings: The annual general meeting (‘AGM’), 

usually held in May, gives the opportunity for all 
shareholders (private and institutional) to ask questions of 
the Board, including the Chairmen of both the Audit and 
Remuneration Committees. The entire Board is also 
available to talk to shareholders before and after the 
meeting. The results of all shareholder votes are announced 
via the London and Johannesburg stock exchanges and are 
available on the Company’s website.

•	Interaction with ‘sell side’ analysts: Many investors develop 

their understanding of the Company partly through 
discussions with independent analysts. Intu engages with 
analysts from around 25 institutions in order to improve the 
accuracy and insight of their research. The Board is kept 
informed of analyst commentary and recommendations. 
A list of the analysts covering Intu can be found at 
intugroup.co.uk/investors/shareholders-bondholders/
analysts/

•	Debt investors: Representatives of Intu’s key relationship 

banks are invited to the bi-annual results presentations by 
the executive team and meet periodically with the Finance 
Director. Institutional investors in certain of the Group’s 
listed debt are invited to periodic updates on the Group’s 
business and performance. We welcome the moves by 
some credit side institutional investors towards more 
openness regarding holdings of debt instruments and 
‘road show’-style one-to-one meetings. 

Relations with shareholders

Overall approach
Intu places considerable emphasis on maintaining an open 
and frank dialogue with investors. Our programme of investor 
relations activities is based around the financial reporting 
calendar and seeks to: 

•	Develop existing and potential investors’ understanding 
of Intu’s business strategy, operations, performance and 
investment case 

•	Provide to the Board and executive team an insight into the 

differing views of Intu’s shareholders 

With these objectives in mind, the executive team (including, 
on occasion, the Chairman) met with representatives of over 
100 investment institutions during 2012 to keep them 
informed of our performance and plans, to answer their 
specific questions and to understand their views. In addition 
our website provides to all shareholders a great deal of 
immediate as well as general information and a feedback 
facility. Regular visits to our properties enable investors to 
see our operations close up. 

Key components of the investor relations programme
•	One-on-one meetings with principal shareholders: The 

Chairman is available to meet with key investors to answer 
their questions and to better understand their views, 
particularly with regard to governance matters. In addition, 
during 2012, key shareholders were consulted regarding 
proposed changes to remuneration policies (see page 74).

•	Results-related meetings: Institutional shareholders are 

invited to a presentation with question and answer session 
by the executive team on the day of announcement of final 
and interim results. They can choose to attend in person, by 
phone or join the webcast. The Chairman and a number of 
the Non-Executives also attend these presentations.

•	Road shows: In the few weeks following results 

announcements, executive management conduct a series 
of one-to-one and group meetings with institutional 
shareholders in the UK, South Africa, Europe and the US, 
giving the opportunity to meet other fund managers as well 
as the sector specialist of each institution. Unattributable 
feedback from these meetings collected by our brokers is 
provided to the Board. 

•	Investor and analyst property visits: Institutional 

shareholders are invited to attend at least one property visit 
each year with presentations on Intu’s business. This gives 
an opportunity for formal and informal interaction with the 
executive team and the ‘next tier’ of operational 
management. In 2012, investors visited The Harlequin, 
Watford, Lakeside and the Trafford Centre to see recent 
changes and to hear about significant planned projects. 
Such presentations are available for download from the 
Investors section of our website intugroup.co.uk

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Governance continued

Nomination and Review Committee

Chairman 
Patrick Burgess (Chairman of the Board)

Members 
Rob Rowley (Independent Non-Executive Director)

Neil Sachdev (Independent Non-Executive Director)

Number of meetings in 2012 One

Key responsibilities 
The principal role of the Nomination and Review 
Committee is to evaluate the skills available on the Board 
and to determine when appointments and retirements 
are appropriate.

“Following a successful search process in 2012, the 
Committee recommended to the full Board the 
appointment of a new Non-Executive Director and member 
of the Audit Committee, Adèle Anderson. It is intended that 
Adèle will replace Rob Rowley as Chairman of the Audit 
Committee when he steps down in due course. 

In 2011, the Committee recommended a reduction in 
the overall size of the Board and we continue to 
pursue the goal of a smaller, diverse Board which 
retains an appropriate balance of skills, experience and 
independence. At the end of January 2011 the Board 
comprised 11 Directors (excluding the Chairman) and this 
number will reduce to 10 Directors following our 2013 
AGM, and further reduce to 9 Directors when Rob 
Rowley steps down at the end of the year, unless further 
appointments are made by then. Succession planning has 
been a key driver of the process, in particular to ensure 
that the balance of independence on the Board 
remains appropriate, as well as ensuring appropriate 
and independent Committee membership. We will 
maintain a balance of at least 50 per cent independent 
Directors throughout 2013, and will have a majority of 
independent Directors when Rob Rowley steps down.

With the appointment of a new Non-Executive Director, 
the Committee has reviewed the induction process (set out 
in detail in the following report) to ensure that it remains 
robust and appropriate, and has also considered the 
training requirements of existing Directors during the year.

The Terms of Reference of the Committee have been 
overhauled during the year, to provide, inter alia, that all 
Non-Executive Directors be invited to attend Nomination 
and Review Committee meetings when the appointment 
of a new Director is being recommended to the Board.”

72

Responsibilities
In addition to its key responsibilities set out above, the 
Committee is also responsible for carrying out the annual 
performance evaluation of the Board, its Committees and 
individual Directors, as well as making recommendations 
to the Board on appointments to the Board, including the 
induction programme for newly appointed Directors, and on 
succession planning.

Appointment of new Non‑Executive Director
During 2012, the Nomination and Review Committee led a 
search for a new independent Non-Executive Director which 
resulted in the appointment of Adèle Anderson on 22 February 
2013. The Committee established a comprehensive set of 
criteria and in particular were looking for a candidate with 
the necessary skills and financial background to take on the 
position of Audit Committee Chair given Rob Rowley intended 
to step down as a Non-Executive Director at the end of 2013. 
Executive search firm Korn/Ferry Whitehead Man were engaged 
to assist with the process and compiled a shortlist consisting 
of both male and female candidates from a diverse range of 
backgrounds. The shortlist was reviewed by the Committee 
and a number of candidates were recommended for interview. 
The candidates were interviewed by the Committee and by the 
majority of other Board members, following which the Board 
unanimously approved the appointment of Adèle as being the 
most suitable candidate given her extensive financial expertise, 
as a qualified ACA and former KPMG partner, with significant 
relevant Audit Committee experience.

Diversity
The Nomination and Review Committee, and the Board, 
recognises the importance of boardroom diversity, not just 
gender specific, and the Committee’s policy is to seek to ensure 
that all available suitable candidates are taken into account 
when drawing up shortlists of candidates for possible 
appointments to the Board. However, the priority of the 
Committee and the Board is to ensure that the Group continues 
to have the strongest and most effective Board possible, and 
therefore all appointments to the Board are made on merit 
against objective criteria. The Board is supportive of the Davies 
Report recommendations in relation to Board diversity and is 
pleased to report that there are now two female Non-Executive 
Directors on the Board. Female representation on the Board 
currently stands at 16.6 per cent; it will be 18 per cent when 
John Abel retires at the 2013 AGM and 20 per cent, if the 
composition of the Board remains as it is now, when Rob Rowley 
leaves us at the end of the year.

Female representation is high throughout the Group’s senior 
management ranks, with women occupying 42 per cent of 
management roles. With an increased focus within the Group 
on staff development and training, we are aiming to increase the 
pipeline of executive women who will have the necessary skills 
and experience to take on Board level roles either at Intu or 
externally, where practical, in the future.

Succession planning
The Committee regularly reviews the skills and experience of 
the Non-Executive members of the Board and their unexpired 
terms of office. As stated in the 2011 Corporate Governance 
Report, Ian Henderson stepped down as a Non-Executive 

Intu Properties plc 2012 Annual ReportDirector at the 2012 AGM having served for some seven years. 
We also noted last year that both Rob Rowley and John Abel 
would step down at the 2013 AGM. It has since been agreed 
as noted above that Rob will remain on the Board for a period 
in order to provide an effective handover of his duties as 
Chairman of the Audit Committee to Adèle Anderson. Rob is 
in his third three-year term as a Non-Executive Director and 
is currently the longest serving Non-Executive Director on 
our Board. Rob is also the Senior Independent Director and 
the announcement of his successor in that role will be made 
in due course.

In accordance with the Committee’s previously stated aim of 
reducing the overall size of the Board, the Board will not replace 
John Abel. 

As Neil Sachdev will be entering his third three-year term as a 
Non-Executive Director following the AGM in May 2013, assuming 
that he is re-elected, the Committee has conducted a rigorous 
review of his independence and his continuing contribution to the 
Board and its Committees. The review was conducted with the 
other anticipated Board changes in mind, and in particular the 
relatively short tenure of the remaining Non-Executive Directors. 
The Committee has determined that Neil Sachdev remains 
robustly independent and continues to make a valuable 
contribution to the Board and Committees, and has concluded 
that he should continue in office for a further three-year term.

The Nomination and Review Committee believes that the 
balance of skills, knowledge and experience on the Board and 
the Board Committees is satisfactory and is expected to 
continue to be so following the changes referred to above.

Renewal of Non‑Executive appointments
All Directors, with the exception of John Abel who is stepping 
down, will submit themselves for re-election at the forthcoming 
Annual General Meeting in May 2013. Shareholders will also be 
asked to elect Adèle Anderson to the Board. 

Induction for new Directors
There is a comprehensive induction programme for new 
Directors which is tailored by the Chairman, in consultation 
with the Chief Executive and Company Secretary, depending 
on the type of appointment but includes meetings with Board 
members, senior management and external advisers as well as 
a high-level review of all current projects, Board strategy and an 
in-depth review of the Group’s assets.

Where required, the Company Secretary provides guidance, or 
facilitates the provision of training on Directors’ individual duties 
under the Companies Act 2006 and on legal, regulatory and 
governance matters with which the Company, Board and 
individual Directors must comply.

Education and development
The Chairman, with the assistance of the Nomination and 
Review Committee, regularly considers the need for existing 
Directors to update and refresh their skills and knowledge. In 
addition, this matter is formally included as part of the annual 
performance evaluation exercise. Training is provided for 
Non-Executive Directors in the form of presentations at Board 
meetings. In addition seminars and courses are specifically 
arranged on particular topics of relevance. 

The Board also recognises the need for Directors to keep up to 
date with relevant legislative and regulatory developments as 
well as changes to corporate governance best practice and 
investor expectations. The Company Secretary reports to each 
scheduled Board meeting on these matters, drawing attention 
to any issues of particular relevance. In addition, the Company 
Secretary maintains an up-to-date comprehensive schedule 
summarising legislative and regulatory developments relevant 
to the Company and rated according to risk/impact on the 
Group, which is included with regular Board papers.

Performance evaluation
Every year, the Board conducts an evaluation of its own 
performance and of the performance of the Chairman and 
each of the Board Committees. In addition, the Chairman reviews 
the performance of each individual director and the Senior 
Independent Director oversees the review of the Chairman’s 
performance. The 2013 performance evaluation will be 
conducted by an external facilitator, as required every three years.

The internal performance evaluation in 2012 was conducted by 
way of detailed questionnaires followed by discussion, the 
results of which were considered by the members of the 
Nomination and Review Committee, the Board, and the relevant 
Board Committees. 

The responses to the majority of questions relating to the 
performance of the Board and its Committees, and of the 
Chairman, were positive and constructive. A summary of the 
outcome of the evaluation exercise is as follows:

Areas identified as consistently good:

•	Relationship between the Non-Executive Directors and 

the Chairman

•	Responses to problems/crises

•	Sound systems of internal control

•	Response of management to requests for information

Areas identified for further attention in 2013

•	More frequent Nomination and Review Committee meetings 

and a revised composition

•	Still more frequent communication

•	Further measures to improve the Board’s cohesiveness

With my colleagues, I will address all of these points during 
2013. An immediate response has been to revise the schedule of 
Board and Committee meetings in 2013 to include, besides our 
monthly update calls, quarterly meetings for Non-Executive 
Directors alone, additional Nomination and Review Committee 
meetings and, so as to reduce the pressure of business at 
individual meetings, an additional Board meeting. Also the 
terms of reference of the Nomination and Review Committee 
have been revised to take the above into account.

Patrick Burgess 
Chairman

27 February 2013

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Directors’ remuneration report

Introduction by Chairman of the 
Remuneration Committee

Dear Shareholder,
I am pleased to present Intu’s 2012 Directors’ remuneration 
report to you, which has been prepared by the Remuneration 
Committee and approved by the Board.

Results and context of remuneration for 2012
2012 has been another year of significant progress and 
strong performance for the Group, with the quality of 
Intu’s assets and teams demonstrated by the considerable 
outperformance of national benchmarks against a 
challenging economic background.

Summary of key features for the  
2012 remuneration report
The key areas of focus for the Remuneration Committee in 2012 
have been:

•	Proposed new remuneration policy to be introduced effective 
from 1 January 2013 subject to shareholder approval at the 
forthcoming AGM. The proposed new policy has been the 
subject of a comprehensive consultation with shareholders

•	The Executive Directors’ salaries will be increased by 4.9 per 
cent from 1 April 2013, broadly in line with increases across 
the Group

•	The annual bonus awarded to the Executive Directors for 

the year ended 31 December 2012 was determined by the 
Remuneration Committee under the rules of the existing 
bonus scheme, which will cease to operate, subject to approval 
by shareholders of the new proposals at the forthcoming AGM. 
If approved, the new arrangements will take effect from 
1 January 2013

•	Improved transparency through early adoption of the majority 
of the Government’s new recommendations for remuneration 
report structure and content

How to read this report
This report sets out the remuneration policy for the Executive 
and Non-Executive Directors of Intu, describes the individual 
remuneration of the Directors for the year ended 31 December 
2012 and, in particular, how remuneration is linked to 
performance. In response to feedback from shareholders, and 
the UK Government’s Department of Business Innovation & 
Skills (BIS) consultation and recommendations, we have made 
a number of enhancements to the content and format of this 
report. The Committee has decided to adopt the majority of 
these changes earlier than required under the regulations and 
accordingly this report is divided into:

1.  A forward-looking Policy Section, for 2013 and beyond, which 

details Intu’s remuneration policies and links to strategy;

2.  An Implementation Report, which focuses on the 

remuneration arrangements and outcomes for the year  
under review; and

3.  A third section containing other information required this 

Proposed new Remuneration Policy for 2013 and 
Shareholder Consultation

As advised in last year’s Directors’ remuneration report, the 
Remuneration Committee undertook a root-and-branch review 
of remuneration during the year to ensure Intu executive 
remuneration appropriately:

•	aligns executive and shareholder interests

•	supports the attraction, motivation and retention of 

high calibre executives

•	links executive reward to results

•	reflects latest developments in best practice and is 

also simple and effective.

A number of objectives were identified by the Committee at the 
outset of the review. These were to:

•	appropriately reinforce achievement of Intu’s strategic objectives

•	respond to shareholder feedback

•	rebalance the pay mix towards the long-term

•	reward a balance of absolute and relative measures of 

long-term performance

•	ensure alignment of executives at and below the Board

•	ensure short-term performance measures provide strong 
line-of-sight and appropriately recognise management’s 
contribution to value creation

•	ensure remuneration is sufficiently competitive to allow Intu to 
attract, motivate, and retain high calibre executives at all levels

•	align remuneration with best practice

•	encourage greater levels of personal shareholding amongst 

senior executives

The proposed new arrangements comprise:

•	A new short-term incentive, as described on page 82

•	A new long-term incentive, the Performance Share Plan, as 

described on page 82. The new plan will replace the existing share 
option scheme and accordingly no further option grants will be 
made to the Executive Directors

As a result of this review, the Committee has proposed changes 
to Intu executive remuneration which have been developed in 
conjunction with some of our major shareholders with whom 
we consulted on the proposals. The feedback from most of the 
shareholders was positive and supportive. The proposals are 
described in further detail on page 82 of this report, and will be 
submitted for approval by shareholders at the forthcoming AGM.

Shareholder Annual General Meeting
This remuneration report will be put to the shareholder vote at 
our AGM in May 2013 and we look forward to receiving your 
views and support.

Neil Sachdev 
Chairman of the Remuneration Committee

year under the existing regulations.

27 February 2013

74

Policy section

Intu Properties plc 2012 Annual ReportRemuneration Committee

Policy section

Compliance statement
This report covers the reporting period from 1 January 2012 to 
31 December 2012 and provides details of the Remuneration 
Committee and remuneration policy for Intu Properties plc  
(‘the Company’) . The structure of this report has been prepared 
by the Committee based on the proposed regulations put 
forward by BIS. The Government intends the reforms to be 
enacted by October 2013, but the Remuneration Committee 
believes these proposals enhance disclosure and has therefore 
decided to adopt the majority of the draft regulations.

This is the Directors’ remuneration report of the Company 
which has been produced pursuant to, and in accordance with, 
the Listing Rules, section 420 of the Companies Act 2006 and 
Schedule 8 to the Large and Medium-sized Companies and 
Groups (Accounts and Reports) Regulations 2008. The 
Company has also followed the requirements of the UK 
Corporate Governance Code 2010 (the ‘Code’). This report 
contains both auditable and non-auditable information. 
The information subject to audit is set out in the Directors’ 
emoluments and Executive Directors’ share awards sections on 
pages 86 and 88 respectively. In accordance with section 439 of 
the Companies Act, an advisory resolution to approve this 
report will be proposed at the Annual General Meeting of the 
Company to be held in May 2013. The detail in this report sets 
out how the remuneration principles have been applied in 2012.

Key principles of remuneration policy
The Company’s remuneration policy aims to attract, motivate and 
retain high calibre executives by rewarding them appropriately with 
competitive compensation and benefit packages.

The policy aligns directly the interests of Executive Directors 
and senior staff with the performance of the Company and the 
interests of its shareholders. In summary, the key objectives of 
the policy are as listed opposite on page 74.

As explained opposite, the Remuneration Committee has 
carried out a major review of the remuneration policy in 
consultation with large shareholders and the resultant 
proposals will be put to shareholders for approval at the 
forthcoming AGM. 

Our incentive arrangements, both existing and proposed, 
are designed to reward performance on our Key Performance 
Indicators of:

Chairman: 
Neil Sachdev (Independent Non-Executive Director)

Members: 
Louise Patten (Independent Non-Executive Director)

Rob Rowley (Independent Non-Executive Director)

Number of meetings in 2012: Seven

Key responsibilities: 
The principal role of the Remuneration Committee is to 
determine and agree with the Board the framework and 
policy for the remuneration of the Chief Executive, the 
Finance Director, the Chairman of the Company and such 
other members of the executive management as it is 
designated to consider.

Index to sections contained in this report

Page

74

Introduction by Chairman of the  
Remuneration Committee

75 Policy section

75 Compliance statement

75 Key principles of the remuneration policy

78 Details of Directors’ service contracts

79 Termination payments

79 Pay for performance: scenario analysis

80 Distribution statement

80 Consideration of conditions elsewhere in the Group

•	Total shareholder return

80 Consideration of shareholder views

81

Implementation Report

81 Remuneration Committee membership in 2012

81 Advisers to the Committee

•	Total financial return, i.e. growth in NAV per share plus dividends

•	Income performance, i.e. growth in adjusted EPS

•	Prime property assets, i.e. total property return relative to the IPD

82 Changes made to remuneration arrangements for 2013

•	Like-for-like growth in net rental income

83 Total remuneration in 2012

83 Directors’ remuneration and incentives

85 Exit payments made in year

85 Total shareholdings of Directors

86

Shareholder context

86 Additional information 

•	Occupancy

Our aim is to focus management on delivering sustainable 
long-term performance and support the retention of critical talent.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Directors’ remuneration report continued

This section of our report describes the key components of the remuneration arrangements for 2013 for Executive Directors,  
and at the bottom of the table the remuneration arrangements for the Non-Executive Directors.

Changes  
for 2013



None

None



Purpose 

Operation

Opportunity and  
performance metrics

Base salary
To provide an appropriately competitive 
level of base pay to attract and retain 
talent.

Pension
To help provide for an appropriate 
retirement benefit.

Other benefits
To provide an appropriately  
competitive level of benefits.

Reviewed annually with effect from 
1 April.

Salary levels take account of:

•	Size and nature of the responsibilities 

of each role

•	Market pay levels for the role

•	The executive’s experience

•	Implications for total remuneration

•	Increases for the rest of the Group

•	Overall affordability

The Company operates an approved 
pension arrangement.

Individuals can elect to take some/all as 
a cash supplement.

Base salary increases will be applied in 
line with the outcome of the annual 
review. Individual and Company 
performance are considerations in 
setting base salary.

Base salary increases consistent with 
this policy will be effective from 1 April 
2013 as set out in the Implementation 
report on page 83.

The standard Company pension 
contribution is 24 per cent of base 
salary. The CEO receives an additional 
6.0 per cent of salary in recognition 
of the additional value of the benefit 
foregone on the closure of the defined 
benefit scheme. This amount was 
actuarially determined to be cost-
neutral to the Company.

The Company provides a car allowance 
up to a maximum of £18,000 per 
annum for Executive Directors and 
senior management.

The Company offers BUPA private 
medical insurance to all staff. Premiums 
are paid by the Company and staff are 
subject to income tax on the value of 
the benefit.

David Fischel and Matthew Roberts 
receive the full car allowance of 
£18,000 per annum.

Both David Fischel and Matthew 
Roberts received a taxable benefit in 
respect of private medical insurance. 
Premiums for the 2012/13 tax year 
were £1,476.

Short‑term incentive
To align annual reward with annual 
performance to support retention 
and alignment with shareholders’ 
interests through significant deferral 
of bonus shares.

Intu operates a short-term incentive 
arrangement with a maximum 
individual opportunity set by the 
Remuneration Committee each year 
for Executive Directors.

Maximum STI opportunity for Executive 
Directors: 120 per cent of salary 
(150 per cent in 2012).

Executive’s performance is measured 
relative to challenging targets in key 
financial, operational and strategic 
measures. The measures selected and 
their weightings vary each year 
according to the strategic priorities.

Measures and respective weightings 
used for the 2012 annual bonus are set 
out in the Implementation report on 
page 84, and those proposed for the 
2013 annual bonus are set out in the 
changes made to remuneration 
arrangements for 2013 on page 82.

50 per cent of any earned bonus is 
deferred in Intu shares, half for two 
years and half for three years, vesting 
subject to continued employment.

76

Intu Properties plc 2012 Annual ReportPurpose 

Operation

Opportunity and  
performance metrics

Long‑term incentives
To reward good long-term decisions 
which help grow the value of Intu over a 
three to five-year horizon and support 
the retention of critical executives.

Executive shareholding guidelines
To support shareholder alignment by 
encouraging executives to act like 
shareholders.

Performance Share Plan (‘PSP’)
Following the review of incentives, the 
Committee has proposed to replace the 
existing ESOS with a PSP.

Executive Directors and senior 
executives participate in the PSP. Grants 
are made annually to eligible employees 
at the discretion of the Committee.

Awards can be made as performance 
shares or nil-cost options over a specific 
number of shares and vest one-third, 
one-third, one-third after three, four and 
five years subject to performance and 
continued employment.

The Committee has discretion to 
‘clawback’ awards in certain 
circumstances including if there is a 
material misstatement in the annual 
financial statements or a material 
failure of risk management by 
the Company.

The proposed PSP will be submitted for 
approval by shareholders at the Annual 
General Meeting in May 2013.

Executive Share Option Scheme (‘ESOS’)
Following the incentive review, the 
Committee does not intend to make 
further awards under the ESOS to 
Executive Directors and senior 
executives.

Executive Directors and other senior 
executives are expected to build up 
over a period of three to five years 
a beneficial shareholding based 
on seniority.

To be achieved by retaining at least 
50 per cent of vested share awards 
(net of tax).

Normal maximum opportunity:  
250 per cent of salary.

Long-term incentive performance 
conditions are reviewed on an annual 
basis, and are chosen to be aligned with 
the long-term strategy of the business.

Details of the performance conditions 
for the 2012 awards are provided in the 
Implementation report on page 84 and 
those proposed for 2013 onwards are 
set out in the changes made to 
remuneration arrangements on  
page 82.

Executive shareholding guidelines are 
set out under Total shareholdings of 
Directors on page 85.

Fees
To remunerate Non-Executive 
Directors.

The Chairman and Non-Executive 
Directors’ fees are determined by the 
Board, taking into account the time 
commitment, responsibilities, and the 
skills and experience required.

Current Chairman and Non-Executive 
Director fees are set out in the 
footnotes to the Emoluments table on 
page 86.

Changes  
for 2013



None



None

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
 
Directors’ remuneration report continued

Details of Directors’ service contracts
Chairman
The terms of the Chairman’s appointment broadly reflect the terms of the three-year appointments of the Non-Executive Directors.

Non-Executive Directors
All Non-Executive Directors have been appointed on fixed terms of two or three years, subject to renewal thereafter. Mr R.M. Gordon 
has served for more than nine years and is now subject to a one-year term. All are subject to annual re-election by shareholders. 
The Non-Executive Directors have letters of appointment which include provisions for early termination in specified circumstances.

The Chairman and Non-Executive Directors were entitled to receive an additional payment equivalent to one-year’s fee in the 
event of a change of control of the Company. However, following shareholder feedback at the 2012 AGM, this entitlement is to be 
replaced in the first half of 2013 by an agreement to recompense the Directors for any additional time commitment in certain 
limited circumstances, to be calculated on a per diem basis.

Non-Executive Directors receive no benefits from their office other than fees. They are not eligible to participate in Group 
pension arrangements.

The following table sets out the dates of appointment for the Non-Executive Directors:

A. Anderson
J.G. Abel
R.M. Gordon
A.J.M. Huntley
Lady Patten
R.O. Rowley
N. Sachdev
A.D. Strang
J. Whittaker*

Date of appointment
22 February 2013
2 June 2010
7 May 2010 
8 July 2009
22 September 2011
17 May 2004
1 November 2006
8 July 2009
28 January 2011

Current term expires
2016 AGM
2013 AGM
2013 AGM
2014 AGM
2014 AGM
2013 AGM
2013 AGM
2015 AGM
2014 AGM

*  Mr Whittaker did not receive any fees in respect of his position as Deputy Chairman and a Non-Executive Director of the Company during 2012

Executive Directors
Executive Directors have rolling service contracts which are terminable on 12-months’ notice on either side. None of the existing 
service contracts for Executive Directors makes any provision for termination payments, other than for payment of salary and 
benefits in lieu of notice.

The Executive Directors’ service contracts contain provisions relating to salary, car allowance, pension arrangements, salary 
continuance in the event of extended absence due to illness, holiday and sick pay, life insurance, personal accident, medical 
insurance, dependants’ pensions, and the reimbursement of reasonable out of pocket expenses incurred by the Executive Directors 
while on Company business.

The following service contracts in respect of Executive Directors who were in office during the year are rolling service contracts and 
therefore have no end date:

D.A. Fischel

E.M.G. Roberts

Date of commencement of contract
24 June 1999
17 May 2010

Notice period

12 months

12 months

78

Intu Properties plc 2012 Annual ReportTermination payments
The Company’s policy is to limit severance payments on termination to pre-established contractual arrangements. However, in the 
event of the Company terminating an Executive Director’s contract, the level of compensation would be subject to mitigation if 
considered appropriate. In the event that the employment of an Executive Director is terminated, any compensation payable will be 
determined in accordance with the terms of the service contract between the Company and the employee, as well as the rules of 
any incentive plans.

Under normal circumstances, good leavers are entitled to receive termination payments in lieu of notice based on base salary and 
benefits only. The notice period for both Executive Directors is one year. Note, on a change-of-control the Remuneration Committee 
has discretion to permit early vesting of PSP awards subject to pro-rating for time and performance, unless the Committee in its 
discretion determines otherwise.

In the event an executive is a good leaver, e.g. for reasons of injury, disability etc. or for any other reason, any outstanding PSP 
awards will be pro-rated for time and based on performance to the end of the performance period. In the event of death, early 
vesting is permitted, based on the Committee’s assessment of performance against the performance condition.

For all other leavers, outstanding awards lapse. The Committee retains discretion to alter these provisions (as permitted by 
the relevant Plan Rules) on a case-by-case basis following a review of circumstances to ensure fairness for both shareholders 
and participants.

Pay for performance: scenario analysis
In determining Executive Director pay, the Remuneration Committee (the ‘Committee’) reviews remuneration received and the 
Company’s performance relative to the other FTSE 200 property REITs. In addition, the Committee reviews potential remuneration 
for performance. The following chart shows the potential split between the different elements of the Executive Directors’ 
remuneration under three different performance scenarios; ‘Below threshold’, ‘Target’ and ‘Stretch’.

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Scenario analysis chart
CEO

Stretch

Target
Below 
threshold
0
£000s

500 1,000 1,500 2,000 2,500 3,000

3,500

FD

Stretch

Target
Below 
threshold
0
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Salary

Pension

Beneﬁts

Cash STI

Deferred STI

PSP

500

1,000

1,500

2,000

2,500

3,000

Component
Base salary
Pension
Benefits
Annual bonus 
(cash and deferred shares*)
Performance Share Plan†

‘Below threshold’

‘Target’
Annual base salary
30 per cent of salary for CEO; 24 per cent of salary for FD
Taxable value of annual benefits provided
60 per cent of salary 
(target opportunity)
25 per cent vesting

0 per cent of salary

0 per cent vesting

‘Stretch’

120 per cent of salary 
(maximum opportunity)
100 per cent vesting

* Excludes share price growth
† Based on initial 2013 award, i.e. normal award enhanced by 50 per cent; excludes share price growth

A description of the annual bonus and Performance Share Plan award for 2013 is set out on page 82.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Directors’ remuneration report continued

Distribution statement
The table below shows the percentage change in profit after tax, dividends, and total employee compensation spend from the 
financial year ended 31 December 2011 to the financial year ended 31 December 2012. 

Underlying earnings

Dividend

Total employee 
pay expenditure

£139m

£138m

–0.6%

150

125

100

75

50

25

£128m

£128m

+0%

150

125

100

75

50

25

60

50

40

30

20

10

£29.0m

£30.5m

+5%

£m

2011

2012

£m

2011

2012

£m

2011

2012

Consideration of conditions elsewhere in the Group
In making remuneration decisions, the Committee also considers the pay and employment conditions elsewhere in the Group. 
Prior to the annual pay review, the Committee receives a report from the HR Director setting out changes to broader employee pay. 
This forms part of the basis for determining Executive Director remuneration. The Company consulted with employees in 2012, 
as part of an employee survey, over the effectiveness and appropriateness of the remuneration policy.

The increase made to the Executive Directors’ base salary for 2013 was 4.9 per cent for both the Chief Executive and the 
Finance Director. 

In addition to salary, all Group employees are entitled to participate in the Share Incentive Plan, and may be granted an annual 
bonus on a discretionary basis dependent on the satisfaction of corporate and personal objectives. At the discretion of the 
Remuneration Committee, certain employees may also be awarded long-term incentives in the form of options granted under 
the Company’s share option schemes.

Consideration of shareholder views
When determining remuneration, the Committee takes into account the guidelines of investor bodies and shareholder views. 
As part of the remuneration review undertaken during the year, the Committee has moved to address the concerns voiced by 
shareholders at last year’s AGM.

In response to shareholder feedback, the Remuneration Committee carried out a comprehensive review of remuneration policy 
during the year as described on page 82. The Committee consulted with the Group’s largest shareholders on the new proposals 
and a number of amendments were made to take shareholder comments into account.

80

Intu Properties plc 2012 Annual ReportImplementation report

Remuneration Committee membership in 2012
The principal responsibilities of the Committee, which take full account of the recommendations contained within the Code, include:

•	Determining the remuneration policy for the Company’s Executive Directors and senior executives

•	Determining individual remuneration packages for the Chairman, Executive Directors and senior executives

•	Setting appropriately stretching and achievable targets for the Company’s incentive schemes in order to motivate executives to 

deliver high levels of performance in the interests of our shareholders, customers and employees

•	Overseeing any significant changes to remuneration policy for the wider employee population

The full duties and responsibilities are set out in the terms of reference of the Committee which are available on the 
Company’s website.

The Remuneration Committee currently comprises three independent Non-Executive Directors. Throughout the year the 
Committee consisted of Rob Rowley and Louise Patten, under the Chairmanship of Neil Sachdev.

The Chairman, Chief Executive, and Company Secretary are invited to attend Committee meetings to contribute to the Committee 
in its deliberations. However, no individual is present when his or her remuneration is being discussed.

The Remuneration Committee met a total of seven times in 2012, including three scheduled meetings and four additional meetings 
which focused on the root-and-branch review of remuneration policy. Matters covered at the scheduled meetings included:

•	Executive Director salaries

•	Performance outcomes for the annual bonus

•	Option grants to senior executives

•	The Chairman’s terms of appointment

•	The Directors’ remuneration report

•	Preparation for the AGM

•	Root-and-branch review of remuneration policy and structure for 2013

Advisers to the Committee
The Committee has appointed and received advice from Kepler Associates, a firm of independent remuneration consultants. During 
the year, Kepler Associates provided advice on market trends, incentive design, and other remuneration matters. Kepler Associates is 
independent and does not provide any other services to the Company. The fees paid to Kepler in respect of work carried out in 2012 
totalled £173,385. Kepler Associates is a member of the Remuneration Consultants Group and adheres to its code of conduct.

The Committee has also appointed and been advised by Norton Rose LLP during the year on various remuneration matters. Norton 
Rose does not advise the Company on any other matters. Some work was carried out by Norton Rose in 2012 but this is expected to 
be billed in 2013.

The Committee also makes use of various published surveys to help determine appropriate remuneration levels.

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Directors’ remuneration report continued

Changes made to remuneration arrangements for 2013
As a result of the remuneration review carried out by the Remuneration Committee during the year, and following feedback from 
our major shareholders, the proposed Executive Director remuneration arrangements include:

•	Rebalancing incentives to long-term performance by reducing the maximum annual bonus opportunity from 150 per cent 
of salary to 120 per cent, and replacing the long-term incentive award of up to 200 per cent of salary in options with up to 
250 per cent in performance shares

•	Reviewing executive salaries in 2013 to ensure appropriately positioned vs. market, taking into account implications on the 
total package, and move to annual reviews of salary taking into account increases for the rest of the Group, affordability, 
ensure appropriate competitiveness, and recognise experience, tenure and contribution of each executive

•	Rebalancing annual bonus measures to recognise that NAV is more appropriate in the long-term incentive, reward steady growth 

in earnings and prudent cost management, and recognise individual contribution:

•	one-third on adjusted EPS performance vs. budget

•	one-third on adjusted EPS performance vs. prior year

•	one-third on performance against a scorecard of up to five personal objectives.  

Note, while 33 per cent of the annual bonus is based on personal objectives, this includes quantitatively assessed financial and 
operational measures specific to each role.

•	Deferring 50 per cent of any earned bonus, and increase the deferral period from two years to half for two years and half for 

three years

•	Replacing EPS options with a new Performance Share Plan which rewards TSR and NAV performance. This will improve 

shareholder alignment, and help ensure payouts are less ‘all or nothing’. Performance will be measured one-third over three years, 
one-third over four years and one-third over five years, instead of 100 per cent over three years to provide balance between the 
typical executive time horizon and the longer time horizon of shopping centre investments. Initial awards will be enhanced by 
50 per cent to ensure participants are not unduly disadvantaged by extending the performance period.

Half of awards vest by reference to Absolute Total Return (25 per cent minimum vesting for 6 per cent per annum; full vesting for 
10 per cent per annum; straight-line vesting in between).

Half of awards vest by reference to TSR relative to the top 5 UK-listed REITS1 (25 per cent minimum vesting for TSR in line with 
the third ranked company; full vesting for TSR in line with the top ranked company; straight-line vesting in between), subject to a 
Committee-operated discretionary assessment of underlying financial performance.

Entry vesting will be reduced from 33 per cent to 25 per cent to reflect institutional shareholder preference.

Absolute Total Return (i.e. NAV growth plus dividends) is considered by the Company to be the best internal proxy for TSR and the 
best internal indicator of value creation. Total Shareholder Return is the key objective of most of our shareholders. For incentive 
purposes it is measured over three to five years relative to peers in order to isolate the impact of Intu’s management’s contribution 
from external factors that affect all companies in the peer group.

•	Increasing executive share ownership requirements from 100 per cent of salary to 200 per cent for the Chief Executive and to 

150 per cent for the Finance Director, and introducing a guideline for other executives to be achieved by retaining a proportion of 
vested share awards (net of tax)

•	Allowing the accrual of dividends on performance shares to improve shareholder alignment with respect to dividends

•	Aligning leaver and change-of-control provisions with best practice

•	Introducing clawback on unvested deferred bonus and LTIP awards.

1 British Land, Derwent, Hammerson, Land Securities, and SEGRO.

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Intu Properties plc 2012 Annual Report 
Total remuneration in 2012
Building on disclosures provided last year, and to aid transparency to our shareholders, the table below sets out the total 
remuneration received by each Executive Director for the year to 31 December 2012 together with two ESOS awards which are 
subject to performance to 31 December 2012 but expected to vest in 2013.

Director

1. Base salary
2. Benefits
3. Pension
4. Annual bonus: cash

Annual bonus: deferred

Total
5. ESOS:   2009 award
2010 award

2012
£513,750
£19,476
£154,125
£130,000
£416,000
£1,233,351
£411,859
£126,863

D.A. Fischel

2011
£490,000
£19,449
£147,000
£99,000
£519,750
£1,275,199
£0
£0

2012
£391,250
£19,476
£93,900
£100,000
£320,000
£924,626
£0
£94,156

E.M.G. Roberts

2011
£361,250
£19,449
£86,700
£73,000
£383,250
£923,649
£0
£0

The figures have been calculated as follows:
1 Base salary: amount earned for the year
2 Benefits: the taxable value of annual benefits received in the year
3 Pension: the value of the Company’s contribution during the year (30 per cent salary supplement in lieu of contributions for the CEO, 24 per cent SIPP 

contribution, party taken as a salary supplement, for the FD).

4 Annual bonus: cash and deferred: the value at grant of the annual incentive payable for performance over 2012
5  ESOS: awards made in 2009 and 2010, subject to a 3- and 4-year vesting period respectively, vest subject to EPS performance to 31 December 2012. 

These awards are expected to vest in full on 28 February 2013 and 26 May 2013, respectively. Awards have been valued based on embedded gain and 
the 3-month average share price to 31 December 2013

Directors’ remuneration and incentives
Base salary
Salaries of Executive Directors and other staff are reviewed annually in the light of competitive market practice, including reference 
to comparable data of other companies of a similar size and companies in the Real Estate sector. When determining executive 
remuneration, the Committee takes careful account of pay and employment conditions in the Company as a whole.

The current salaries for Executive Directors are set out below and will be increased with effect from 1 April 2013 by 4.9 per cent 
to reflect the policy of moving salary to median over time, supporting retention of critical talent, and recognising progression in 
the role:

Executive Director
David Fischel
Matthew Roberts

2012 salary
£520,000
£400,000

2013 salary
£545,480
£419,600

% increase
4.9%
4.9%

Pensions
The main benefits are pension contributions, private healthcare and the provision of a company car or cash alternative. Standard 
company contribution is 24 per cent of base salary. The CEO receives an additional 6 per cent of salary in recognition of the 
additional value of the benefit foregone on the closure of the defined benefit scheme. This amount was actuarially determined to 
be cost-neutral to the Company.

Annual bonus
The maximum award for both the CEO and FD in 2012 was 150 per cent of salary.

In 2012, the performance measures for the short-term incentive were weighted as illustrated by the following diagram:

Performance metrics for 2012 short-term Incentive

Growth in adjusted EPS

Relative Property Capital Return 
(vs IPD Retail Index)

22%

22%

Growth in NAV per share plus dividends

22%

Strategic and Operational Objectives

34%

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Directors’ remuneration report continued

Performance against each of the measures for the 2012 short-term incentive arrangements is summarised below:

Performance element
Growth in NAV per share + dividends reinvested
Relative Property Capital Return
Growth in EPS (adjusted for capital transactions)

Weighting
Target
+5%
22%
22% in line with IPD
*
22%

Strategic and Operational Objectives†

34%

2012 performance

Remuneration  
Committee  
assessment
+4.1% Below target
+6.4% Above target
+2.4% Above target

Assessed by  
Remuneration Committee 
against a scorecard for  
each Executive Director Above target

* Not disclosed due to commercial sensitivity
† With regard to performance during the year against Strategic and Operational Objectives, the Committee noted the following achievements in particular:

•	High occupancy at 96 per cent; successful relettings offsetting impact of tenant failures representing 6 per cent of rent roll
•	Signed 169 long-term leases for £44 million; new annual rent at average of 7 per cent above previous passing rent
•	Active management and major extension projects pipeline now amounts to £1 billion programme over 10 years.

Individual short‑term incentive outcomes
A participant’s bonus is also based on the Remuneration Committee’s assessment of their individual contribution to the Group’s 
performance during the year and the achievement of specific individual objectives, which are determined and communicated at the 
start of each year, and include key strategic, financial and operational goals.

For 2012, David Fischel and Matthew Roberts each received a total short-term incentive award of 105 per cent of salary 
(70 per cent of maximum opportunity), respectively.

Deferral into shares
76 per cent of the 2012 short-term incentive for both David Fischel and Matthew Roberts was deferred into Intu shares.

Employees must remain in employment with the Company for a period of two years (three years for shares awarded under the SIP)
after the date of award before such shares are released.

The approximate deferred share awards to the Executive Directors, based on a share price of £3.55 per share, are as follows:

Name
D.A. Fischel
E.M.G. Roberts

Executive Share Option Scheme (ESOS)

SIP  
(three year deferral)
845
845

Deferred shares 
 (two year deferral) 
116,338
89,296

Awards made during the year
In March 2012, in line with the 2012 remuneration policy and as disclosed in the 2011 Directors’ remuneration report, David Fischel 
and Matthew Roberts received market value share option grants with a face value of 200 per cent of salary. Vesting is based on 
three-year EPS growth ranging from 4 per cent p.a. to 6 per cent p.a. 100 per cent vests for growth of 6 per cent p.a. or higher; 33 
per cent vests for growth of 4 per cent p.a.; awards vest on a straight-line basis for performance between these levels. Awards will 
lapse for growth of less than 4 per cent p.a.

As permitted under the rules of the Executive Share Option Scheme, both David Fischel and Matthew Roberts elected to receive 
their awards through a Joint Ownership Structure which required them to make an upfront contribution to acquire an interest in 
Intu shares.

Full details of historical ESOS grants are provided in the table on page 88. Note, on a change-of-control or in the case of a good 
leaver, the Remuneration Committee has discretion to permit early vesting of ESOS awards and pro-rate for time and performance, 
as appropriate.

84

Intu Properties plc 2012 Annual ReportAwards vesting during the year
The standard performance condition for options granted between 2004 and 2011 is as follows:

“The Company’s ‘smoothed’ earnings are to grow over a three-year period at a rate in excess of 5 per cent per annum compound. 
‘Smoothed’ earnings means the percentage increase in underlying earnings per share, adjusted by (a) excluding exceptional and 
valuation items and (b) limiting trading or non-recurring items to 10 per cent of profit before tax.”

The base figure for comparison purposes in respect of both the 2009 and 2010 option grants is the ‘smoothed’ earnings 
achieved, after adjustment for the demerger, as at 31 December 2009. The ‘smoothed’ EPS base figure was 13.9 pence. Based on 
EPS performance to 31 December 2012 (16.1 pence), the 2009 and 2010 ESOS awards are due to vest in full in February and 
May 2013, respectively.

No 2011 ESOS awards are due to vest until 2014 (subject to performance). As noted above, the performance condition for grants of 
options in 2012 are based on a sliding scale of EPS performance.

Other share schemes
The Company operates an Employee Share Ownership Plan (‘ESOP’) which has in the past used funds provided to purchase shares 
required under the annual bonus scheme.

The Company operates a Share Incentive Plan (‘SIP’) for all eligible employees, including Executive Directors, who may receive up to 
£3,000 worth of shares as part of their annual bonus arrangements. The SIP arrangements offer worthwhile tax advantages to 
employees and to the Company. Also, as part of the SIP arrangements, the Company offers eligible employees the opportunity to 
participate in a ‘Partnership’ share scheme, the terms of which are governed by HM Revenue & Customs regulations.

Exit payments made in year
No payments for loss of office were paid to former Directors of the Company during 2012.

Total shareholdings of Directors
In 2009 the Committee introduced a requirement for Executive Directors to build up, over a three to five-year period, and maintain 
a shareholding in the Company with a value equivalent to at least one year’s annual salary. The chart below illustrates the value of 
Executive Directors’ shareholdings against the guideline of 100 per cent of salary. The Committee reviewed this requirement as 
part of the root-and-branch review of policy carried out in 2012 and, as a result, the new requirement effective from 1 January 2013 
is for the Executive Directors to build up, over a period of three to five years, a holding with a value equivalent to 200 per cent of 
salary (David Fischel) and 150 per cent of salary (Matthew Roberts).

Shareholdings at 31 December 2012 against guidelines:

Shareholdings at 31 December 2012 (% of salary)

2,000

1,500

1,000

500

Actual holding as a percentage of base salary†
Shares subject to deferral as a percentage of base salary‡
Shares subject to performance conditions as a percentage of base salary

*  Individual shareholding guideline was increased for 2013 from 100 per cent of salary 
to 200 per cent for the Chief Executive and 150 per cent for the Finance Director. 

†   Includes shares which have been held in the SIP trust for more than ﬁve years 

and are transferrable to Mr Fischel at any time free of tax and NI.

‡  Includes shares held in the SIP trust for less than ﬁve years.

Shareholding 
guideline* 
(200% salary)

Shareholding 
guideline* 
(150% salary)

%

D.A. Fischel

E.M.G. Roberts

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Directors’ remuneration report continued

Shareholder context
The table below shows the advisory vote on the 2011 Directors’ remuneration report at the April 2012 AGM. It is the Committee’s 
policy to consult with major shareholders prior to any major changes.

Votes

For
71.13%

Against
28.67%

Abstentions
0.19%

The main areas of shareholder concern were the continued use of a single-performance criteria and cliff-vesting for awards of 
options, and the Remuneration Committee’s discretion to accelerate the vesting of options on a change of control. As noted in the 
2011 Directors’ remuneration report, the Committee sought to address the issue of ‘cliff-vesting’ by introducing a sliding scale 
performance condition for options awarded to the Executive Directors and senior executives in March 2012. Long-term incentive 
awards for Executive Directors and senior executives made from 2013 onwards will be made under the new Performance Share 
Plan which provides for sliding scale vesting on two separate performance criteria measured over three, four and five-year periods. 
The rules of the new Performance Share Plan provide that, on a change of control, awards of Performance Shares under the plan 
will vest to the extent that the Committee determines that any applicable performance conditions have been or would likely have 
been satisfied. The number of shares to vest in such circumstances will also generally be reduced to reflect a reduced service period.

Additional information

Emoluments table

Salary and 
service 
contract 
remuneration 
£

Benefits*
in kind 
£

Annual 
cash bonus‡
£

Other 
– including car 
allowance 
(see notes 
below) 
£

Directors’ 
fees 
£

Other 
fees 
£

Aggregate
emoluments†
2012 
£

Aggregate 
emoluments 
excluding 
pensions 
2011 
£

400,000

5,416

513,750
391,250

1,476
1,476

130,000
100,000

172,125
18,000

405,416

392,293 

817,351
510,726

755,449 
453,699 

65,375
54,375
54,375
88,125

59,375
78,125
59,375

60,875 
51,875 
 51,875 
81,875 

 15,923 
67,708 
56,875 

54,375
54,375
54,375
54,375

54,375
54,375
54,375

11,000

33,750

5,000
23,750
5,000

–

–

–

–

1,305,000

8,368

230,000

190,125

17,074
397,699

9,109
87,609

26,183

 61,042 
2,218,801 2,049,489

Name
Chairman
D.P.H. Burgess
Executive
D.A. Fischel1
E.M.G. Roberts2
Non-Executive
J.G. Abel3
R.M. Gordon
A.J.M. Huntley
R.O. Rowley
Lady Patten  
(appointed 22.09.11)
N. Sachdev
A.D. Strang 
J. Whittaker  
(appointed 28.01.11)4
Retired during year
I.J. Henderson 
(retired 25.04.12) 5
Totals

*  Benefits provided to Executive Directors relate primarily to the provision of medical insurance. The benefits provided for the Chairman comprise medical insurance.
† Aggregate emoluments exclude deferred share bonuses and pension contributions which are detailed below.
‡ Deferred bonus is not included in this table. In the case of Mr Fischel, the amount of deferred bonus for 2012 is £103,750 lower than for 2011, and for 

Mr Roberts it is £63,250 lower.

1 Mr Fischel received a payment of £154,125 in lieu of accruing further benefits under the Company’s pension arrangements (included in ‘other’).
2 In addition to the emoluments shown in the table above, Mr Roberts received contributions from the Company to his Self Invested Pension Plan of £93,900 

having opted out from membership of the Group’s defined contribution pension plan.

3 In addition to his role as a Non-Executive Director, Mr Abel also provides consultancy services to the Group in respect of its investments in India. Mr Abel 

receives consultancy fees at a rate of £1,000 per day, and received total fees of £11,000 (shown in ‘other’) during 2012 under the consultancy arrangements.

4 Mr Whittaker did not receive any remuneration in 2012 in connection with his position as Deputy Chairman and a Non-Executive Director of the Company.
5 Mr Henderson stepped down as a Non-Executive Director on 25 April 2012. Mr Henderson was appointed as a member of the Capital Projects Committee 

with effect from 2 May 2012 and received fees of £7,500 in respect of this appointment in 2012 (included in ‘other’).

Chairman and Non‑Executive Director fees
The Chairman receives a fee of £400,000 per annum. The current base fee for Non-Executive Directors is £55,000 per annum, increased 
from £52,500 p.a. on 1 April 2012. The Senior Independent Director receives an additional fee of £10,000 per annum. Committee 
chairmen receive £15,000 per annum, increased from £10,000 on 1 April 2012, and Committee members receive £5,000 per annum. 

86

Intu Properties plc 2012 Annual ReportFive‑year TSR chart
The following graph shows the Total Shareholder Return (‘TSR’) for Intu Properties plc over the five-year period ended 31 December 
2012, compared with our closest comparator group for this purpose, the FTSE 350 Real Estate Index. TSR is defined as share price 
growth plus reinvested dividends.

Five-year Total Shareholder Return (TSR) performance

150

100

50

2008

2009

Intu

FTSE 350 Real Estate

2010
FTSE 100

2011

2012

2013

Other directorships
Executive Directors are not generally encouraged to hold external directorships unless the Chairman determines that such 
appointment is in the Group’s interest and does not cause any conflict of interest. Where such appointments are approved and held, 
it is a matter for the Director in question and the Chairman to agree whether fees paid in respect of the appointment are retained by 
the individual or paid to the Company.

David Fischel currently holds three external directorships. In two cases he receives and retains the fees. His principal external 
appointment is as a non-executive director of US company Equity One, Inc, in which Intu retains an investment through a joint 
venture company EQY-CSC LLC. Mr Fischel also holds another external appointment as a non-executive director of Marlowe 
Investments (Kent) Limited, a UK private company which relates to Mr Fischel’s family affairs and does not require any 
significant time commitment and does not conflict in any way with Mr Fischel’s role as Chief Executive of Intu. Mr Fischel is also 
a Non-Executive Director of Prozone Capital Shopping Centres Limited, an Indian shopping centre owner and developer in which 
Intu has a 33 per cent interest. Mr Fischel does not receive a fee in respect of this appointment.

During 2012, Mr Fischel received a fee of $50,500 in respect of his directorship of Equity One, Inc. Mr Fischel retained the fees 
paid in respect of his appointment. In addition to his fee, restricted stock in Equity One, Inc. awarded to Mr Fischel vested during 
the year with a value on vesting of $69,217.50. Mr Fischel also received and retained a fee of £5,000 in respect of his non-executive 
directorship of Marlowe Investments (Kent) Limited. 

Quasi‑loan to Director
All employees of the Group are entitled to an interest-free travel season ticket loan which is repaid over the year via deductions 
from salary. Neither Mr Fischel nor Mr Roberts received a season ticket or other loan from the Group during 2012.

Payments to former Directors
A Life Presidency fee of £150,000 (2011 – £150,000) was paid to Sir Donald Gordon, the Group’s Life President and former 
Chairman who founded the Company in 1980. The Life Presidency fee was agreed by the Board at the time of his retirement in July 
2005 in recognition of his outstanding contribution to the Group. The payment is guaranteed under a legally binding Deed, and is 
payable annually for the remainder of Sir Donald’s life, Sir Donald Gordon is 82 and remains a major shareholder. 

In addition, the Company entered into a consultancy agreement with Sir Donald following his retirement. The consultancy 
arrangements ceased on 30 June 2011 and no further payments have been made. The payment for 2011 was £100,000.

Mrs Kay Chaldecott resigned from the Board on 30 September 2011 but continues to provide consultancy services to the Group, 
relating to new business opportunities, development projects and senior retailer relations. These consultancy services are provided 
under the terms of a two-year Consultancy Agreement which will terminate in October 2013. During 2012, Mrs Chaldecott received 
a total of £80,000 in respect of such consultancy arrangements. Further payments of a total of £66,666 are anticipated to be made 
to Mrs Chaldecott in 2013 in respect of the remaining term of the Consultancy Agreement.

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Directors’ remuneration report continued

Mr Ian Henderson stepped down as a Non-Executive Director on 25 April 2012. Mr Henderson was appointed as a member 
of the Capital Projects Committee on 2 May 2012 and receives an annual fee of £3,000 plus £1,500 per meeting attended. 
Mr Henderson’s Capital Projects Committee fees for 2012 are shown in the Emoluments table on page 86.

Alternate Directors
Steven Underwood and Raymond Fine serve as alternate Directors to John Whittaker and Richard Gordon respectively. Neither 
Mr Underwood nor Mr Fine received any fees in 2012 in respect of their appointment as alternate Directors. Mr Fine received a fee 
of £156,875 in respect of consultancy services provided to the Company in connection with South African tax and shareholder 
issues (particularly in respect of South African dividends tax), liaison with the Gordon Family and other related matters.

Summary of share awards tables
Executive Directors are entitled to participate in the Company’s Approved and Unapproved share option schemes and the proposed 
new Performance Share Plan (‘PSP’). No awards have yet been made under the PSP which is subject to approval by shareholders at 
the Company’s 2013 Annual General Meeting. Full details relating to the holding, grant and exercise of share options by Executive 
Directors are set out below:

Approved Share Option Scheme

Director
D.A. Fischel
E.M.G. Roberts

Year  
granted
2009
2010

Option price 
(pence)
271.69*
313

Held at 
31 December 
2011
11,041
9,584

Granted  
in year
–
–

Adjustment  
in year
–
–

Exercised  
in year
–
–

Lapsed  
in year
–
–

Held at 
31 December 
2012

Exercisable between
11,041 28/02/13 – 28/05/19
9,584 26/05/13 – 26/05/20

Unapproved Share Option Scheme

Director
D.A. Fischel

E.M.G. Roberts

Year  
granted
2009
2010
2011
2012
2010
2011
2012

Option price 
(pence)
271.69*
313
387
336
313
387
336

Held at 
31 December 
2011
649,648
607,000
350,000
–
437,416
250,000
–

Granted  
in year
–
–
–
309,000
–
–
238,000

Adjustment  
in year
–
–
–
–
–
–
–

Exercised  
in year
–
–
–
–
–
–
–

Lapsed  
in year
–
–
–
–
–
–
–

Held at 
31 December 
2012

Exercisable between
649,648 28/02/13 – 28/05/19
607,000 26/05/13 – 26/05/20
350,000 03/03/14 – 03/03/21
309,000 05/03/15 – 05/03/22
437,416 26/05/13 – 26/05/20
250,000 03/03/14 – 03/03/21
238,000 05/03/15 – 05/03/22

* Exercise price following adjustment in respect of demerger in 2010. Pre-adjustment exercise price was 359 pence.

The market price of Intu Properties plc ordinary shares as at 31 December 2012 was 350.2 pence and during the year the price 
varied between 300.9 pence and 365.6 pence.

The interests of Directors in conditional awards of ordinary shares under the annual bonus scheme are detailed in note 52 on 
pages 137 and 138.

On behalf of the Board

Neil Sachdev 
Chairman of the Remuneration Committee

27 February 2013

88

Intu Properties plc 2012 Annual ReportDirectors’ report

The Directors have pleasure in presenting their Annual Report and the audited financial statements  
of the Group and Company for the year ended 31 December 2012.

Principal activities
During the period the principal activity of Intu Properties plc 
(‘Intu’) was that of an investment holding company incorporated 
in the United Kingdom whose business is the management of a 
portfolio of investments in the property sector predominantly, 
but not exclusively, in the United Kingdom. Intu has been a Real 
Estate Investment Trust (‘REIT’) since 1 January 2007.

Intu is a specialist developer, owner and manager of pre-eminent 
UK regional shopping centres.

Business review
The Chairman’s statement on pages 10 to 12, the Business 
review on pages 31 to 41, the Financial review on pages 44 to 49, 
the Key performance indicators on pages 20 and 21, and Key 
risks and uncertainties on pages 26 and 27 provide detailed 
information relating to the Group, the operation, development 
and future prospects of the business, the results and financial 
position for the year ended 31 December 2012 and the principal 
risks and uncertainties facing the Group. The Corporate 
responsibility review on pages 51 to 57 contains information 
about environmental matters, the Group’s employees and social 
and community matters. The Financial review, accounting 
policies on pages 102 to 105 and note 35 on pages 122 to 126 
contain information on the use of financial instruments.

Dividends
The Directors declared an interim ordinary dividend of 5.0 pence 
(2011 – 5.0 pence) per share on 26 July 2012, which was paid on 
20 November 2012, and have recommended a final ordinary 
dividend of 10.0 pence per share (2011 – 10.0 pence).

Share capital and control of the Company
Details of the Company’s share capital including changes during 
the year in the issued share capital and details of the rights 
attaching to the Company’s ordinary shares are set out in note 38 
on page 127. No shareholder holds securities carrying special 
rights with regards to control of the Company. Shares held by 
the Company’s Employee Share Ownership Plan rank pari passu 
with the shares in issue and have no special rights, but voting 
rights and rights of acceptance of any offer relating to the 
shares rest with the Plan’s Trustee and are not exercisable by 
the employees.

There are no restrictions on voting rights or any arrangements 
by which, with the Company’s co-operation, financial rights are 
held by a person other than the shareholder, or any agreements 
between shareholders known to the Company which may result 
in restrictions on the transfer of shares or on voting rights.

Under a £375 million Revolving Facility agreement dated 
25 February 2009 (as amended by amendment agreements 
dated 2 October 2009 and 19 February 2010, and further 
amended and restated on 18 November 2011) between, 
amongst others, the Company and HSBC Bank PLC (as ‘Agent’), 
on a change of control, if directed by a lender, the Agent may by 
notice to the Company cancel the commitment of that lender 
and declare the participation of that lender in all outstanding 
loans, together with accrued interest and all other amounts 
accrued and owing to that lender under the finance documents, 
immediately due and payable.

Under the terms and conditions of the £300 million 2.5 per cent 
Guaranteed Convertible Bonds issued on 4 October 2012 by 
Intu (Jersey) Limited (formerly Capital Shopping Centres 
(Jersey) Limited) (the ‘Issuer’) and guaranteed by the Company, 
on a change of control of the Company bondholders would have 
a right for a limited period of 60 days to exercise their exchange 
rights at an enhanced exchange price (i.e. lower than the 
prevailing exchange price). In addition, bondholders would 
become entitled for a limited period of 60 days to require the 
Issuer to redeem their bonds at their principal amount, together 
with accrued and unpaid interest.

The Company is not party to any other significant agreements 
that would take effect, alter or terminate following a change of 
control of the Company.

The Company does not have any agreements with any Executive 
Director or employee that would provide compensation for loss 
of office or employment resulting from a takeover except that 
provisions of the Company share schemes may cause options 
and awards outstanding under such schemes to vest on a 
takeover. The terms of appointment of the Non-Executive 
Directors currently provide for a payment equal to their basic 
annual fee in the event of change of control in recognition of 
the additional work involved in such an event, however this 
entitlement is to be replaced in the first half of 2013 by an 
agreement to recompense the Directors for any additional time 
commitment in certain limited circumstances, to be calculated 
on a per diem basis.

Going concern
After making enquiries, the Directors have reasonable 
expectation that the Company and the Group have adequate 
resources to continue in operational existence for the 
foreseeable future. For this reason they continue to adopt the 
going concern basis in preparing the financial statements.

Shareholders’ attention is drawn to the going concern disclosure 
contained in the Notes to the accounts on page 102.

89

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Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Directors’ report continued

Internal control
The statement on corporate governance on pages 63 to 73 
includes the Board’s assessment following a review of internal 
controls and consideration of the 2005 Financial Reporting 
Council’s internal control guidance for Directors.

Directors
The Directors of Intu who held office during the year were 
as follows:

Chairman: 
D.P.H. Burgess

Deputy Chairman: 
J. Whittaker1

Executive: 
D.A. Fischel 
E.M.G. Roberts

Non-Executive: 
J.G. Abel 
R.M. Gordon1 
A.J.M. Huntley 
Lady Patten 
R.O. Rowley 
N. Sachdev 
A.D. Strang

Retired during the year: 
I.J. Henderson (stepped down 25 April 2012)

1 Mr Whittaker and Mr Gordon have appointed Steven Underwood and 
Raymond Fine respectively as their alternates under the terms of the 
Company’s Articles of Association.

Adèle Anderson was appointed as a Non-Executive Director on 
22 February 2013.

In accordance with provision B.7.1 of the UK Corporate 
Governance Code, all Directors are subject to re-election at the 
forthcoming Annual General Meeting.

Pursuant to the Articles of Association of the Company, the 
Company has indemnified the Directors to the full extent 
allowed by law. The Company maintains Directors’ and Officers’ 
insurance which is reviewed annually.

Additional information relating to the Directors can be found in 
note 52 on pages 137 and 138 on Directors’ interests, in the 
Corporate governance report on pages 64 to 73, and in the 
Directors’ remuneration report on pages 74 to 88.

The powers of the Directors are determined by UK legislation 
and the Articles of Association of the Company, together with 
any specific authorities that may be given to the Directors by 
shareholders from time to time, such as the power to allot 
shares and the power to make market purchases of the 
Company’s shares which are described in note 38 on page 127.

90

Articles of Association
The rules governing the appointment and replacement 
of Directors are contained in the Company’s Articles 
of Association.

Changes to the Articles of Association must be approved by 
shareholders in accordance with the legislation in force from 
time to time.

Substantial shareholdings
As at 22 February 2013 Intu had been notified of the following 
substantial holdings of voting rights over ordinary shares of Intu:

•	The Peel Group 173,566,817 (19.99 per cent)

•	Coronation Asset Management (Pty) Limited 126,312,499 

(14.54 per cent)

•	The family interests of Sir Donald Gordon 92,143,203 

(10.61 per cent)

•	Public Investment Corporation 36,870,928 (4.25 per cent)

•	BlackRock, Inc. 34,952,303 (4.03 per cent)

Employees
Intu actively encourages employee involvement and 
consultation and places emphasis on keeping its employees 
informed of the Company’s activities and financial performance 
by such means as employee briefings and publication to all staff 
of relevant information and corporate announcements. In 2012, 
Intu conducted an all employee survey covering a range of 
topics to which 88 per cent of staff responded.

The annual bonus arrangements help develop employees’ 
interest in the Company’s performance; full details of these 
arrangements are given in the Directors’ remuneration report 
on pages 74 to 88. Note 52 on pages 137 to 138 contains details 
of conditional awards of shares under the annual bonus scheme 
and bonus shares currently outstanding, as well as outstanding 
options.

Intu operates a non-discriminatory employment policy and full 
and fair consideration is given to applications for employment 
from people with disabilities or other protected characteristics 
under the Equality Act where they have the appropriate skills 
and abilities and to the continued employment of staff who 
become disabled.

Intu encourages the continuous development and training of 
its employees and the provision of equal opportunities for the 
training and career development of disabled employees and 
those with protected characteristics.

Further information relating to employees is given on 
pages 22 to 25 and in note 10 on page 107. The Group 
provides retirement benefits for the majority of its employees. 
Details of the Group pension arrangements are set out in 
note 50 on page 136.

Intu Properties plc 2012 Annual ReportThe environment
We have developed a Corporate Responsibility (‘CR’) strategy 
and details of our policies and the Group’s aims alongside the 
latest full version of our annual CR report are to be found on the 
Company’s website. An overview of the Group’s CR activity is 
printed on pages 51 to 57, and a summary booklet is also 
available for download from the website or on request from the 
Company Secretary’s office.

The Company recognises the importance of minimising the 
adverse impact on the environment of its operations and the 
obligation to carefully manage energy and water consumption 
and waste recycling.

The Company strives continuously to improve its environmental 
performance. The Environmental Management System and 
associated Environmental Policy and Guide are regularly 
reviewed to ensure that the Company maintains its 
commitment to environmental matters.

Charitable donations
During the year, the Group made charitable donations 
amounting to £335,000 (2011 – £332,000). In addition, the 
directly managed shopping centres provided the equivalent 
of £1,114,000 (2011 – £1,394,000) in support, including 
staff time working in the community and the provision of free 
mall space and services. They facilitated a further £468,000 
(2011 – £406,000) through collections by charities on the malls. 
The total cash equivalent community support for the year was 
£1,917,000 (2011 – £2,132,000). No political donations were 
made in the year.

Creditor payment policy
The Group’s policy and practice is to pay creditors in accordance 
with agreed terms of business.

The Company does not ordinarily pay its creditors directly as 
this is carried out by other companies in the Group. As a result, 
the Company has a nil trade creditor balance and it is not 
practical to calculate creditor days for the Company as at 
31 December 2012 (2011 – nil trade creditor balance).

Directors’ disclosure of information to the auditors
So far as the Directors are aware, there is no relevant audit 
information of which the auditors are unaware and each 
Director has taken all reasonable steps to make himself or 
herself aware of any relevant audit information and to establish 
that the auditors are aware of that information.

Auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their 
willingness to continue in office and a resolution seeking to 
reappoint them will be proposed at the forthcoming Annual 
General Meeting.

Annual General Meeting
The notice convening the 2013 Annual General Meeting of the 
Company will be published separately and will be available on 
the Company’s website and distributed to those shareholders 
who have elected to receive hard copies of shareholder 
information.

By order of the Board

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Susan Marsden 
Secretary

27 February 2013

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91

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report, 
the Directors’ remuneration report and the financial statements 
in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial 
statements for each financial year. Under that law the Directors 
have prepared the Group and Company financial statements in 
accordance with International Financial Reporting Standards 
(‘IFRSs’) as adopted by the European Union. Under company 
law the Directors must not approve the financial statements 
unless they are satisfied that they give a true and fair view of the 
state of affairs of the Group and the Company and of the profit 
or loss of the Group and Company for that period. In preparing 
these financial statements, the Directors are required to:

(a) select suitable accounting policies and then apply them 

consistently

(b) make judgements and accounting estimates that are 

reasonable and prudent

(c) state whether applicable IFRSs as adopted by the European 

Union have been followed, subject to any material departures 
disclosed and explained in the financial statements

(d) prepare the financial statements on the going concern basis, 
unless it is inappropriate to presume that the Company will 
continue in business

The Directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the Company’s 
transactions and disclose with reasonable accuracy at any time 
the financial position of the Company and the Group and enable 
them to ensure that the financial statements and the Directors’ 
remuneration report comply with the Companies Act 2006 and, 
as regards the Group financial statements, Article 4 of the IAS 
Regulation. They are also responsible for safeguarding the 
assets of the Company and the Group and hence for taking 
reasonable steps for the prevention and detection of fraud and 
other irregularities.

The Directors are responsible for the maintenance and integrity 
of the Company’s website. Legislation in the United Kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed in 
the Governance section on pages 60 and 61 confirm that, to the 
best of their knowledge:

(a) the Group financial statements, which have been prepared in 
accordance with IFRSs as adopted by the EU, give a true and 
fair view of the assets, liabilities, financial position and profit 
of the Group

(b) the Directors’ report contained in the Governance section of 
the Annual Report includes a fair review of the development 
and performance of the business and the position of the 
Group, together with a description of the principal risks and 
uncertainties that it faces

Signed on behalf of the Board on 27 February 2013

David Fischel 
Chief Executive 

Matthew Roberts 
Finance Director

92

Intu Properties plc 2012 Annual Report 
Accounts

In this section

Independent auditors’ report to the members of Intu Properties plc

94 
95  Consolidated income statement
96  Consolidated statement of comprehensive income
97  Balance sheets
98  Statements of changes in equity
101  Statements of cash flows
102  Notes to the accounts

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93

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Independent auditors’ report to the members of 
Intu Properties plc  

Independent auditors’ report to the members of  
Intu Properties plc (company registration number 03685527)  

Opinion on other matters prescribed by the 
Companies Act 2006  

We have audited the Group and Company financial statements (‘the 
financial statements’) of Intu Properties plc (formerly Capital Shopping 
Centres Group PLC) for the year ended 31 December 2012, which 
comprise the Consolidated income statement, the Consolidated 
statement of comprehensive income, the Group and Company Balance 
sheets, the Group and Company Statements of changes in equity, the 
Group and Company Statements of cash flows, and the related notes. 
The financial reporting framework that has been applied in their 
preparation is applicable law and International Financial Reporting 
Standards (‘IFRSs’) as adopted by the European Union and, as regards 
the Company financial statements, as applied in accordance with the 
provisions of the Companies Act 2006. 

Respective responsibilities of Directors and auditors  

As explained more fully in the Statement of Directors’ responsibilities 
set out on page 92, the Directors are responsible for the preparation 
of the financial statements and for being satisfied that they give a true 
and fair view. Our responsibility is to audit and express an opinion on the 
financial statements in accordance with applicable law and International 
Standards on Auditing (UK and Ireland). Those standards require us to 
comply with the Auditing Practices Board’s Ethical Standards for 
Auditors.  

This report, including the opinions, has been prepared for and only for 
the Company’s members as a body in accordance with Chapter 3 of part 
16 of the Companies Act 2006 and for no other purpose. We do not, in 
giving these opinions, accept or assume responsibility for any other 
purpose or to any other person to whom this report is shown or into 
whose hands it may come save where expressly agreed by our prior 
consent in writing. 

In our opinion:  

• the part of the Directors’ remuneration report to be audited has been 

properly prepared in accordance with the Companies Act 2006; 

• the information given in the Directors’ Report for the financial year 

for which the financial statements are prepared is consistent with the 
financial statements; and 

• the information given in the Corporate Governance Statement set out 

on pages 63 to 73 with respect to internal control and risk management 
systems and in the Directors’ report on pages 89 to 91 about share 
capital structures is consistent with the financial statements. 

Matters on which we are required to report by exception  

We have nothing to report in respect of the following:  

Under the Companies Act 2006 we are required to report to you if, in 
our opinion:  

• adequate accounting records have not been kept by the Company, or 
returns adequate for our audit have not been received from branches 
not visited by us; or  

• the Company financial statements and the part of the Directors’ 
remuneration report to be audited are not in agreement with the 
accounting records and returns; or  

• certain disclosures of Directors’ remuneration specified by law are not 

made; or  

• we have not received all the information and explanations we require 

for our audit; or 

• a corporate governance statement has not been prepared by the 

Scope of the audit of the financial statements  

Company. 

An audit involves obtaining evidence about the amounts and disclosures 
in the financial statements sufficient to give reasonable assurance that 
the financial statements are free from material misstatement, whether 
caused by fraud or error. This includes an assessment of: whether the 
accounting policies are appropriate to the Group’s and the Company’s 
circumstances and have been consistently applied and adequately 
disclosed; the reasonableness of significant accounting estimates 
made by the Directors; and the overall presentation of the financial 
statements. In addition, we read all financial and non-financial 
information in the Annual Report to identify material inconsistencies 
with the audited financial statements. If we become aware of any 
apparent material misstatements or inconsistencies we consider the 
implications for our report.  

Under the Listing Rules we are required to review:  

• the Directors’ statement, set out on page 102, in relation to going 

concern; 

• the parts of the Corporate Governance Statement relating to the 

Company’s compliance with the nine provisions of the UK Corporate 
Governance Code specified for our review; and 

• certain elements of the report to shareholders by the Board on 

Directors’ remuneration. 

Opinion on financial statements  

In our opinion:  

Alison Morris 
(Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP  
Chartered Accountants and Statutory Auditors 

• the financial statements give a true and fair view of the state of the 

Group’s and of the Company’s affairs as at 31 December 2012 and of 
the Group’s profit and Group’s and Company’s cash flows for the year 
then ended; 

London 

27 February 2013 

• the Group financial statements have been properly prepared in 

accordance with IFRSs as adopted by the European Union; 

• the Company financial statements have been properly prepared in 
accordance with IFRSs as adopted by the European Union and as 
applied in accordance with the provisions of the Companies Act 2006; 
and 

• the financial statements have been prepared in accordance with 
the requirements of the Companies Act 2006 and, as regards the 
Group financial statements, Article 4 of the lAS Regulation. 

94

Intu Properties plc 2012 Annual ReportAccounts 
 
 
 
 
Consolidated income statement  
for the year ended 31 December 2012  

Continuing operations 
Revenue 

Net rental income 
Net other income 
Revaluation and sale of investment and development property 
Gain on acquisition of subsidiaries 
Gain on sale of subsidiaries 
Sale and impairment of other investments 
Impairment of goodwill 
Distribution of shares received from Provogue 
Administration expenses – ongoing 
Administration expenses – exceptional 

Operating profit 
Finance costs 
Finance income 
Other finance costs 
Change in fair value of financial instruments 
Net finance costs 

Profit before tax and associates 
Current tax 
Deferred tax 

Taxation 
Share of profit of associates 

Profit for the year 

Attributable to: 
Owners of Intu Properties plc 
Non-controlling interest 

Basic earnings per share 
Diluted earnings per share 

Notes 

4 

5 
6 
7 
41 
42 

41 
24 

8 

12 

13 
14 

15 
15 

15 
24 

18 
18 

2012 
£m 

525.7

362.6
6.3
40.9
2.3
–
1.4
(8.8)
10.2
(26.7)
(1.1)
387.1

(197.3)
0.2
(67.9)
30.5
(234.5)

152.6
(0.5)
5.6

5.1
0.9

158.6

155.9
2.7
158.6

17.6p
17.3p

2011 
£m 

516.1

364.0
7.8
63.0
52.9
40.4
(8.7)
–
–
(24.1)
(20.9)
474.4

(198.9)
0.8
(55.7)
(193.4)
(447.2)

27.2
(0.3)
(2.3)

(2.6)
9.0

33.6

30.0
3.6
33.6

2.9p
2.9p

Details of underlying earnings are presented in the underlying profit statement on page 143. Underlying earnings per share are shown in note 18(c). 

95

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of comprehensive income  
for the year ended 31 December 2012 

Profit for the year  

Other comprehensive income 
Revaluation of other investments 
Recognised in sale and impairment of other investments 
Recognised in gain on sale of subsidiaries 
Exchange differences 
Tax relating to components of other comprehensive income 
Other comprehensive income for the year 

Total comprehensive income for the year 

Attributable to: 
Owners of Intu Properties plc 
Non-controlling interest 

Notes 

25 

42 

15 

2012  
£m 

158.6 

28.7 
2.7 
– 
(7.4) 
(6.0) 
18.0 

176.6 

173.9 
2.7 

176.6 

2011 
£m 

33.6

(17.3)
8.7
(10.9)
(5.5)
2.3
(22.7)

10.9

7.3
3.6

10.9

96

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheets  
as at 31 December 2012 

Non-current assets 
Investment and development property  
Plant and equipment  
Investment in group companies 
Investment in associate companies 
Other investments 
Goodwill 
Derivative financial instruments 
Trade and other receivables 

Current assets 
Trading property 
Current tax assets 
Derivative financial instruments 
Trade and other receivables 
Cash and cash equivalents 

Total assets 

Current liabilities 
Trade and other payables 
Current tax liabilities 
Borrowings 
Derivative financial instruments 

Non-current liabilities 
Borrowings 
Derivative financial instruments 
Other provisions 
Other payables 

Total liabilities 
Net assets 

Equity 
Share capital 
Share premium 
Treasury shares 
Convertible bonds 
Other reserves 
Retained earnings 

Attributable to owners of Intu Properties plc 
Non-controlling interest 

Total equity 

Notes 

20
21
22
24
25

29
27

26

29
27
28

30

31
29

31
29
37

38

40
33
39

These consolidated financial statements have been approved for issue by the Board of Directors on 27 February 2013. 

David Fischel 
Chief Executive 

Matthew Roberts 
Finance Director 

Notes on pages 102 to 138 form part of these consolidated financial statements.  

Group 
2012 
£m 

7,009.7
5.6
–
40.9
148.8
4.0
21.2
104.0

7,334.2

2.1
–
0.7
66.6
188.1
257.5

Group  
2011  
£m 

Company 
2012 
£m 

Company 
2011 
£m 

6,896.2 
5.1 
– 
32.5 
171.2 
9.3 
22.7 
91.1 

7,228.1 

7.5 
4.0 
– 
69.6 
90.7 
171.8 

–
4.7
2,225.5
–
–
–
–
0.4

2,230.6

–
–
–
680.5
0.3
680.8

–
4.9
2,167.9
–
–
–
–
1.2

2,174.0

–
–
–
564.8
0.5
565.3

7,591.7

7,399.9 

2,911.4

2,739.3

(220.9)
(0.6)
(94.2)
(19.1)
(334.8)

(3,751.6)
(495.8)
–
(3.3)
(4,250.7)

(4,585.5)
3,006.2

434.2
577.4
(43.9)
143.7
336.7
1,528.9

2,977.0
29.2

3,006.2

(278.3) 
– 
(65.4) 
(27.5) 
(371.2) 

(3,546.1) 
(535.7) 
(1.2) 
(0.1) 
(4,083.1) 

(4,454.3) 
2,945.6 

430.2 
564.1 
(29.5) 
143.7 
318.7 
1,494.9 

2,922.1 
23.5 

2,945.6 

(344.6)
–
–
–
(344.6)

–
(11.0)
–
–
(11.0)

(355.6)
2,555.8

434.2
577.4
(43.9)
143.7
61.4
1,383.0

2,555.8
–

2,555.8

(43.3)
–
–
–
(43.3)

(45.0)
–
–
–
(45.0)

(88.3)
2,651.0

430.2
564.1
(29.5)
143.7
61.4
1,481.1

2,651.0
–

2,651.0

97

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of changes in equity  
for the year ended 31 December 2012 

Group 

At 1 January 2012 
Profit for the year 
Other comprehensive income: 
Revaluation of other  
investments (note 25) 
Recognised in sale of other  
investments 
Exchange differences 
Tax relating to components  
of other comprehensive  
income (note 15) 

Total comprehensive income  
for the year 
Ordinary shares issued 
Dividends (note 17) 
Transfer relating to scrip 
dividends  
Interest on convertible bonds  
(note 33) 
Share-based payments (note 49) 
Acquisition of treasury shares 
Disposal of treasury shares 
Non-controlling interest 
additions 

Attributable to owners of Intu Properties plc 

Share  
capital  
£m 

430.2 
– 

Share  
premium  
£m 

564.1 
– 

Treasury 
shares 
£m 

Convertible 
bonds
£m 

(29.5)
–

143.7
–

Other 
reserves 
£m 

318.7
–

Retained 
earnings 
£m 

1,494.9
155.9

Non-
controlling 
interest
£m 

23.5
2.7

Total 
£m 

2,922.1 
155.9 

Total 
equity
£m 

2,945.6
158.6

– 

– 
– 

– 

– 
4.0 
– 

– 

– 
– 
– 
– 

– 

– 

– 
– 

– 

– 
22.3 
– 

(9.0) 

– 
– 
– 
– 

– 

–

–
–

–

–
–
–

–

–
–
(15.6)
1.2

–

(14.4)

(43.9)

–

–
–

–

–
–
–

–

–
–
–
–

–

–

28.7

2.7
(7.4)

(6.0)

18.0
–
–

–

–
–
–
–

–

–

–

–
–

–

155.9
–
(127.8)

9.0

(5.8)
3.8
–
(1.1)

–

28.7 

2.7 
(7.4) 

(6.0) 

173.9 
26.3 
(127.8) 

– 

(5.8) 
3.8 
(15.6) 
0.1 

– 

(121.9)

(119.0) 

–

–
–

–

2.7
–
–

–

–
–
–
–

28.7

2.7
(7.4)

(6.0)

176.6
26.3
(127.8)

–

(5.8)
3.8
(15.6)
0.1

3.0

3.0

3.0

(116.0)

143.7

336.7

1,528.9

2,977.0 

29.2

3,006.2

At 31 December 2012 

4.0 

434.2 

13.3 

577.4 

98

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of changes in equity  
for the year ended 31 December 2012 continued 

Group 

At 1 January 2011 
Profit for the year 
Other comprehensive income: 
Revaluation of other  
investments (note 25) 
Recognised in impairment  
of other investments 
Recognised in gain on sale  
of subsidiaries (note 42) 
Exchange differences 
Tax relating to components  
of other comprehensive  
income (note 15) 

Total comprehensive income  
for the year 

Ordinary shares issued 
Dividends (note 17) 
Convertible bonds issued  
(note 33) 
Interest on convertible bonds  
(note 33) 
Share-based payments (note 49) 
Acquisition of treasury shares 
Disposal of treasury shares 
Realisation of merger reserve 

Share  
capital  
£m 

346.3 
– 

Share 
premium 
£m 

20.4
–

– 

– 

– 
– 

– 

–

–

–
–

–

– 
83.9 
– 

–
543.7
–

– 

– 
– 
– 
– 
– 

–

–
–
–
–
–

At 31 December 2011 

83.9 
430.2 

543.7
564.1

Treasury 
shares 
£m 

Convertible 
bonds
£m 

Attributable to owners of Intu Properties plc 

Other 
reserves 
£m 

526.5
–

Retained  
earnings  
£m 

1,410.1 
30.0 

Total 
£m 

2,273.4 
30.0 

Non-
controlling 
interest
£m 

19.9
3.6

Total 
equity
£m 

2,293.3
33.6

–
–

–

–

–
–

–

–
–
–

(29.9)
–

–

–

–
–

–

–
–
–

–

(17.3)

8.7

(10.9)
(5.5)

2.3

(22.7)
–
–

– 

– 

– 
– 

– 

30.0 
– 
(127.8) 

(17.3) 

8.7 

(10.9) 
(5.5) 

2.3 

7.3 
627.6 
(127.8) 

143.7

–

– 

143.7 

–
–
(0.2)
0.6
–

0.4
(29.5)

–
–
–
–
–

143.7
143.7

–
–
–
–
(185.1)

(185.1)
318.7

(5.3) 
3.6 
– 
(0.8) 
185.1 

(5.3) 
3.6 
(0.2) 
(0.2) 
– 

–

–

–
–

–

3.6
–
–

–

–
–
–
–
–

(17.3)

8.7

(10.9)
(5.5)

2.3

10.9
627.6
(127.8)

143.7

(5.3)
3.6
(0.2)
(0.2)
–

54.8 
1,494.9 

641.4 
2,922.1 

–
23.5

641.4
2,945.6

99

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of changes in equity  
for the year ended 31 December 2012 continued 

Company 

At 1 January 2012 
Profit for the year 

Total comprehensive income for the year 
Ordinary shares issued 
Dividends (note 17) 
Transfer relating to scrip dividends 
Interest on convertible bonds (note 33) 
Share-based payments (note 49) 
Acquisition of treasury shares 
Disposal of treasury shares 

Share 
capital 
£m 

430.2
–

Share 
premium 
£m 

564.1
–

–
4.0
–
–
–
–
–
–

4.0

–
22.3
–
(9.0)
–
–
–
–

13.3

Attributable to owners of Intu Properties plc 

Treasury 
shares 
£m 

Convertible 
bonds 
£m 

(29.5)
–

–
–
–
–
–
–
(15.6)
1.2

(14.4)

143.7
–

–
–
–
–
–
–
–
–

–

Other 
reserves  
£m 

61.4 
– 

– 
– 
– 
– 
– 
– 
– 
– 

– 

Retained 
earnings 
£m 

1,481.1
23.8

23.8
–
(127.8)
9.0
(5.8)
3.8
–
(1.1)

(121.9)

Total 
£m 

2,651.0
23.8

23.8
26.3
(127.8)
–
(5.8)
3.8
(15.6)
0.1

(119.0)

At 31 December 2012 

434.2

577.4

(43.9)

143.7

61.4 

1,383.0

2,555.8

Company 

At 1 January 2011 

Loss for the year 
Total comprehensive income for the year 

Ordinary shares issued 
Dividends (note 17) 
Convertible bonds issued (note 33) 
Interest on convertible bonds (note 33) 
Share-based payments (note 49) 
Acquisition of treasury shares 
Disposal of treasury shares 
Realisation of merger reserve 

At 31 December 2011 

Share 
capital 
£m 

346.3

–
–

83.9
–
–
–
–
–
–
–

83.9
430.2

Share 
premium 
£m 

Treasury 
shares 
£m 

Convertible 
bonds 
£m 

Other 
reserves  
£m 

Retained 
earnings 
£m 

Total 
£m 

Attributable to owners of Intu Properties plc 

20.4

(29.9)

–
–

543.7
–
–
–
–
–
–
–

543.7
564.1

–
–

–
–
–
–
–
(0.2)
0.6
–

0.4
(29.5)

–

–
–

–
–
143.7
–
–
–
–
–

143.7
143.7

246.5 

1,470.4

2,053.7

– 
– 

– 
– 
– 
– 
– 
– 
– 
(185.1) 

(185.1) 
61.4 

(44.1)
(44.1)

–
(127.8)
–
(5.3)
3.6
–
(0.8)
185.1

(44.1)
(44.1)

627.6
(127.8)
143.7
(5.3)
3.6
(0.2)
(0.2)
–

54.8
1,481.1

641.4
2,651.0

100

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
Statements of cash flows  
for the year ended 31 December 2012 

Notes 

45

33

Cash flows from continuing operations 
Cash generated from operations 
Interest paid 
Interest received 
Taxation 
REIT entry charge 

Cash flows from operating activities 
Cash flows from investing activities 
Purchase and development of property, plant and equipment 
Sale of property 
Sale of other investments 
Acquisition of businesses 
Cash sold with businesses 
Cash acquired with businesses 
Other investing activities 

Cash flows from investing activities 
Cash flows from financing activities 
Issue of ordinary shares 
Issue of convertible bonds 
Acquisition of treasury shares 
Sale of treasury shares 
Partnership equity introduced 
Cash transferred from restricted accounts 
Borrowings drawn 
Borrowings repaid 
Interest on convertible bonds 
Equity dividends paid 

Cash flows from financing activities 

Net increase/(decrease) in cash and cash equivalents 
Cash and cash equivalents at 1 January 

Cash and cash equivalents at 31 December 

28

Group
2012
£m 

339.2
(252.7)
0.2
4.2
(15.2)

75.7

(81.2)
1.2
48.7
(4.2)
–
1.6
(17.2)

(51.1)

0.1
300.0
(0.1)
0.1
3.0
0.5
–
(107.3)
(5.8)
(117.2)
73.3

97.9
88.2

186.1

Group 
2011 
£m 

323.0 
(250.0) 
0.8 
(2.2) 
(38.9) 

32.7 

(26.9) 
1.7 
– 
(72.8) 
(20.3) 
37.6 
(8.3) 

(89.0) 

44.7 
23.7 
(0.2) 
0.3 
– 
1.1 
101.4 
(138.2) 
(5.3) 
(125.6) 
(98.1) 

(154.4) 
242.6 

88.2 

Company
2012
£m 

Company
2011
£m 

180.7
(11.8)
–
–
–

168.9

(1.2)
–
–
–
–
–
–

(1.2)

0.1
–
(0.1)
0.1
–
–
–
(45.0)
(5.8)
(117.2)
(167.9)

(0.2)
0.5

0.3

33.1
(13.1)
–
–
–

20.0

(2.1)
–
–
–
–
–
–

(2.1)

44.7
23.7
(0.2)
0.3
–
–
45.0
–
(5.3)
(125.6)
(17.4)

0.5
–

0.5

101

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
Notes to the accounts 

1 Accounting convention and  

basis of preparation  

These consolidated financial statements have been prepared in 
accordance with International Financial Reporting Standards, as adopted 
by the European Union (‘IFRS’), IFRIC interpretations and with those 
parts of the Companies Act 2006 applicable to companies reporting 
under IFRS. The Directors have taken advantage of the exemption 
offered by Section 408 of the Companies Act not to present a separate 
income statement for the Company. 

The consolidated financial statements have been prepared under the 
historical cost convention as modified by the revaluation of property, 
available-for-sale investments, and certain other financial assets and 
liabilities. A summary of the more important Group accounting policies is 
set out in note 2. 

The accounting policies used are consistent with those applied in the last 
annual financial statements, as amended to reflect the adoption of new 
standards, amendments, and interpretations which became effective in 
the year. During 2012, the following standards, amendments and 
interpretations endorsed by the EU became effective for the first time 
for the Group’s 31 December 2012 year end: 

• IFRS 7 Financial Instruments: Disclosures (amendment – disclosures 

on transfers of financial assets) 

This amendment had no impact on the financial statements. 

The following standards have been issued and adopted by the EU 
but are not effective for the year ended 31 December 2012 and have 
not been adopted early: 

• IFRS 7 Financial Instruments; Disclosures (amendment – offsetting 
requirements and converged disclosure) (effective from 1 January 
2013); 

• IFRS 10 Consolidated Financial Statements (effective from 1 January 

2014); 

• IFRS 11 Joint Arrangements (effective from 1 January 2014); 

• IFRS 12 Disclosure of Interests in Other Entities (effective from 

1 January 2014); 

• IFRS 13 Fair Value Measurement (effective from 1 January 2013); 

• IAS 1 Presentation of Financial Statements (amendment) (effective 

from 1 July 2013); 

• IAS 12 Income Taxes (amendment) (effective from 1 January 2013); 

• IAS 19 Employee Benefits (revised) (effective from 1 January 2013); 

• IAS 27 Separate Financial Statements (revised) (effective from 

1 January 2014); 

• IAS 28 Investments in Associates and Joint Ventures (revised) 

(effective from 1 January 2014); and 

• IAS 32 Financial Instruments: Presentation (amendment) (effective 

from 1 January 2014). 

IFRS 11, which has recently been endorsed by the EU, removes the 
choice of accounting treatments currently available under IAS 31 
Interests in Joint Ventures. This will impact the Group’s existing 
accounting policy in respect of joint ventures but the accounting for 
joint operations will remain unchanged. The Group’s interest in joint 
ventures will be accounted for using the equity method rather than 
proportionally consolidating the Group’s share of assets, liabilities, 
income and expenses on a line-by-line basis. This change will reduce 
total assets and total liabilities as currently presented, with no change 
expected in net assets. The Group does not intend to early adopt 
this standard.  

Other pronouncements are not expected to have a material impact 
on the financial statements, but may result in changes to presentation or 
disclosure. 

Additionally a number of standards have been issued but are not yet 
adopted by the EU and so are not available for early adoption. The most 
significant of these are: 

• IFRS 9 Financial Instruments; 

• IFRS 10 Consolidated Financial Statements (amendment); 

• IFRS 12 Disclosure of Interests in Other Entities (amendment); 

• IAS 27 Separate Financial Statements (amendment); 

• IAS 32 Financial Instruments: Presentation (amendment); 

• Amendments to (transition guidance) IFRS 10, IFRS 11 and IFRS 12; 

and 

• Amendments arising from annual improvements 2009-2011 cycle. 

The impact of these on the Group is being reviewed. 

Use of estimates and assumptions 

The preparation of financial statements in conformity with generally 
accepted accounting principles requires the use of estimates and 
assumptions that affect the reported amounts of assets and liabilities at 
the date of the financial statements and the reported amounts of 
revenues and expenses during the reporting period. Although these 
estimates are based on management’s best knowledge of the amount, 
event or actions, actual results ultimately may differ from those 
estimates. In particular significant judgement is required in the use of 
estimates and assumptions in the accounting for investment and 
development property and in the valuation of derivative financial 
instruments. Additional detail on these two areas is provided in the 
relevant accounting policy in note 2. 

Going concern 

The Group’s business activities, together with the factors likely to affect 
its future development, performance and position are set out in the 
Chairman’s statement on pages 10 to 12 and the Business review 
on pages 31 to 41. The financial position of the Group, its cash flows, 
liquidity position and borrowing facilities are described in the Financial 
review on pages 44 to 49. In addition note 35 includes the Group’s risk 
management objectives, details of its financial instruments and hedging 
activities, its exposures to liquidity risk and details of its capital structure. 

The Group prepares regular forecasts and projections which include 
sensitivity analysis taking into account reasonably possible changes in 
trading performance and asset values and assesses the potential impact 
of these on the Group’s liquidity position and available resources. 

Following the issue of the £300 million 2.5 per cent convertible bond on 
4 October 2012, as at 31 December 2012 the Group had £188.1 million 
of cash and £375.0 million of undrawn facilities. The Group has no major 
asset-specific debt refinancing in 2013. The Group is currently working 
with its banks and advisers on a new debt funding platform, which is 
intended to become a central source of financing for the Group. This 
platform would enable the Group to access the capital markets on an 
ongoing basis alongside bank debt, thereby diversifying the Group’s 
sources of funds and lengthening its maturities. 

Based on the most recent projections the Directors have concluded that 
there is a reasonable expectation that the Group has adequate resources 
to continue in operational existence for the foreseeable future. Thus they 
continue to adopt the going concern basis of accounting in preparing the 
Group’s financial statements. 

102

Intu Properties plc 2012 Annual ReportAccounts continued 
2 Accounting policies –  
Group and Company  

Basis of consolidation 

The consolidated financial information includes the Company and its 
subsidiaries and their interests in joint ventures and associates. 

All intra-group transactions, balances and unrealised gains on 
transactions between Group companies are eliminated on consolidation. 

– subsidiaries 

A subsidiary is an entity for which the Company has the ability, either 
directly or indirectly, to govern the financial and operating policies, 
whether through a majority of the voting rights or otherwise. 
Subsidiaries are fully consolidated from the date on which control is 
transferred to the Group and are de-consolidated from the date that 
control ceases. 

The Company’s investment in Group companies is carried at cost less 
accumulated impairment losses.  

– joint ventures 

A joint venture is an entity or operation for which the Company, either 
directly or indirectly, is in a position to jointly control the financial and 
operating policies of the entity or operation. 

The Group’s interest in a joint venture is accounted for using 
proportional consolidation. The Group’s share of the assets, liabilities, 
income and expenses are combined with the equivalent items in the 
consolidated financial statements on a line-by-line basis. 

– associates 

An associate is an entity over which the Company, either directly 
or indirectly, is in a position to exercise significant influence by 
participating in, but without control or joint control of, the financial 
and operating policies of the entity. 

The Group’s interest in an associate is accounted for using the 
equity method.  

– non-controlling interest 

A non-controlling interest is the equity in a subsidiary not attributable, 
directly or indirectly, to the Company. Non-controlling interests are 
presented within equity, separately from the amounts attributable 
to equity owners of the Company. Profit or loss and each component 
of other comprehensive income is attributed to equity owners 
of the Company and to non-controlling interests in the 
appropriate proportions. 

Foreign currencies 

The assets and liabilities of foreign entities are translated into pounds 
sterling at the rate of exchange ruling at the reporting date and their 
income statement and cash flows are translated at the average rate 
for the period. Exchange differences arising are dealt with in other 
comprehensive income. 

At entity level, transactions in currencies other than an entity’s 
functional currency are recorded at the exchange rate prevailing at the 
transaction dates. Foreign exchange gains and losses resulting from 
settlement of these transactions and from retranslation of monetary 
assets and liabilities denominated in foreign currencies are recognised 
in the income statement except for some types of hedging arrangement 
which are dealt with in other comprehensive income. 

Revenue recognition 

The Group recognises revenue when the amount of revenue can be 
reliably measured and it is probable that future economic benefits will 
flow to the Group. 

– property revenue 

Rental income receivable is recognised on a straight-line basis over the 
term of the lease. Directly attributable lease incentives are recognised 
within rental income on the same basis.  

Contingent rents, being those lease payments that are not fixed at the 
inception of a lease, for example increases arising on rent reviews or 
rents linked to tenant revenues, are recorded as income in the periods 
in which they are earned. Rent reviews are recognised as income 
from the date of the rent review, based on management’s estimates. 
Estimates are derived from knowledge of market rents for comparable 
properties determined on an individual property basis and updated for 
progress of negotiations. 

Service charge income is recognised on an accruals basis in line with the 
service being provided. 

– trading property income 

Revenue on the sale of trading property is recognised when the 
significant risks and rewards of ownership have been transferred 
to the buyer. This will normally take place on exchange of contracts. 

Interest income 

Interest income is accrued on a time basis, by reference to the principal 
outstanding and the effective interest rate. 

Dividend income 

Dividend income is recognised when the right to receive payment has 
been established. 

Share-based payments 

The cost of granting share options and other share-based remuneration 
to employees and Directors is recognised through the income statement 
with reference to the fair value of the equity instrument, assessed at the 
date of grant. This cost is charged to the income statement over the 
vesting period of the awards. All awards are accounted for an equity 
settled with the credit entry being taken directly to equity.  

For share options an option pricing model is used applying assumptions 
around expected yields, forfeiture rates, exercise price and volatility.  

Investments held in the Company’s own shares in connection with 
employee share plans and other share-based payment arrangements are 
accounted for as treasury shares. 

Exceptional items 

Exceptional items are those items that in the Directors’ view are required 
to be separately disclosed by virtue of their size or incidence to enable a 
full understanding of the Group’s financial performance.  

Taxation 

Current tax is the amount payable on the taxable income for the year 
and any adjustment in respect of prior years. It is calculated using rates 
that have been enacted or substantively enacted by the balance 
sheet date. 

Deferred tax is provided using the balance sheet liability method in 
respect of temporary differences between the carrying amounts of 
assets and liabilities in the balance sheet and their tax bases. 

Temporary differences are not provided on the initial recognition 
of assets or liabilities that affect neither accounting nor taxable profit, 
and differences relating to investments in subsidiaries to the extent that 
they will not reverse in the foreseeable future. 

Deferred tax is determined using tax rates that have been enacted 
or substantively enacted by the balance sheet date and are expected to 
apply when the related deferred tax asset is realised or the deferred tax 
liability is settled.  

Deferred tax assets are recognised only to the extent that management 
believe it is probable that future taxable profit will be available against 
which the temporary differences can be utilised. Deferred tax assets and 
liabilities are offset only when they relate to taxes levied by the same 
authority and the Group intends to settle them on a net basis. 

Tax is included in the income statement except when it relates to items 
recognised directly in other comprehensive income or equity, in which 
case the related tax is also recognised directly in other comprehensive 
income or equity. 

103

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
Notes to the accounts  
continued 

2 Accounting policies –  

Group and Company (continued) 

Investment and development property 

Investment and development property is owned or leased by the Group 
and held for long-term rental income and capital appreciation. 

The Group has elected to use the fair value model. Properties are initially 
recognised at cost and subsequently revalued at the balance sheet date 
to fair value as determined by professionally qualified external valuers on 
the basis of market value. Valuations conform with the Royal Institution 
of Chartered Surveyors (‘RICS’), Valuation Standards 8th Edition and 
IVS1 of International Valuation Standards. 

The main estimates and judgements underlying the valuations are in 
relation to market rent, taking into account forecast growth rates and 
yields based on known transactions for similar properties, vacancies, 
letting periods and likely incentives offered to tenants. 

Properties held under leases are stated gross of the recognised finance 
lease liability.  

The cost of investment and development property includes capitalised 
interest and other directly attributable outgoings incurred during 
development. Interest is capitalised on the basis of the average rate of 
interest paid on the relevant debt outstanding. Interest ceases to be 
capitalised on the date of practical completion. 

Gains or losses arising from changes in the fair value of investment 
and development property are recognised in the income statement.  

Other investments 

Available-for-sale investments, being investments intended to be held for 
an indefinite period, are initially and subsequently measured at fair value. 
For listed investments, fair value is the current bid market value at the 
reporting date. For unlisted investments where there is no active market, 
fair value is assessed using an appropriate methodology. 

Gains or losses arising from changes in fair value are included in other 
comprehensive income, except to the extent that losses are considered 
to represent a permanent impairment, in which case they are recognised 
in the income statement.  

Upon disposal, accumulated fair value adjustments are recycled from 
reserves to the income statement. 

Goodwill 

Goodwill arising on business contributions is carried at cost less 
accumulated impairment losses. Goodwill is assessed for impairment on 
an annual basis. 

Impairment of assets 

The Group’s assets are reviewed at each balance sheet date to determine 
whether events or changes in circumstances exist that indicate that their 
carrying amount may not be recoverable. If such an indication exists, the 
asset’s recoverable amount is estimated. The recoverable amount is the 
higher of an asset’s fair value less costs to sell and its value in use. An 
impairment loss is recognised in the income statement for the amount 
by which the asset’s carrying amount exceeds its recoverable amount. 
For the purposes of assessing impairment, assets are grouped at the 
lowest levels for which there are separately identifiable cash flows. 

Depreciation is not provided in respect of investment and 
development property. 

Trading property 

Gains or losses arising on the sale of investment and development 
property are recognised when the significant risks and rewards of 
ownership have been transferred to the buyer. This will normally take 
place on exchange of contracts. The gain or loss recognised is the 
proceeds received less the carrying value of the property and costs 
directly associated with the sale. 

Leases 

Leases are classified according to the substance of the transaction. 
A lease that transfers substantially all the risks and rewards of ownership 
to the lessee is classified as a finance lease. All other leases are normally 
classified as operating leases. 

– Group as lessee 

Finance leases of investment property are accounted for as finance 
leases and recognised as an asset and an obligation to pay future 
minimum lease payments. The investment property asset is included 
in the balance sheet at fair value, gross of the recognised finance 
lease liability. Contingent rents are recognised as they accrue. 

Other finance lease assets are capitalised at the lower of the fair value 
of the leased asset or the present value of the minimum lease payments 
and depreciated over the shorter of the lease term and the useful life 
of the asset. 

Lease payments are allocated between the liability and finance charges 
so as to achieve a constant financing rate. 

Rentals payable under operating leases are charged to the income 
statement on a straight-line basis over the lease term.  

– Group as lessor 

Investment properties are leased to tenants under operating leases, with 
rental income being recognised on a straight-line basis over the lease 
term. For more detail see the revenue recognition accounting policy. 

Plant and equipment 

Plant and equipment consists of vehicles, fixtures, fittings and other 
equipment. Plant and equipment is stated at cost less accumulated 
depreciation and any accumulated impairment losses. 

Depreciation is charged to the income statement on a straight-line basis 
over an asset’s estimated useful life up to a maximum of five years. 

104

Trading property comprises those properties either intended for sale or 
in the process of construction for sale. Trading property is carried at the 
lower of cost and net realisable value. 

Trade receivables 

Trade receivables are recognised initially at fair value and subsequently 
measured at amortised cost.  

The Directors’ exercise judgement as to the collectability of trade 
receivables and determine if it is appropriate to impair these assets. 
Factors such as days past due, credit status of the counterparty and 
historical evidence of collection are considered. 

Cash and cash equivalents 

Cash and cash equivalents comprise cash in hand, deposits with banks, 
whether restricted or unrestricted, and other short-term liquid 
investments with original maturities of three months or less. 

Trade payables 

Trade payables are recognised initially at fair value and subsequently 
measured at amortised cost. 

Provisions 

Provisions are recognised when the Group has a current obligation 
arising from a past event and it is probable that the Group will be 
required to settle that obligation. Provisions are measured at the 
Directors’ best estimate of the expenditure required to settle that 
obligation at the balance sheet date. 

Pensions 

The costs of defined contribution schemes and contributions to personal 
plans are charged to the income statement in the year in which they 
are incurred. 

Borrowings 

Borrowings are recognised initially at their net proceeds on issue and 
subsequently carried at amortised cost. Any transaction costs and 
premiums or discounts are recognised over the contractual life using the 
effective interest method. 

Intu Properties plc 2012 Annual ReportAccounts continued2 Accounting policies –  

Group and Company (continued) 

In the event of early repayment, all unamortised transaction costs are 
recognised immediately in the income statement. 

Derivative financial instruments 

The Group uses derivative financial instruments to manage exposure to 
interest rate and foreign exchange risk. They are initially recognised on 
the trade date at fair value and subsequently re-measured at fair value. 
In assessing fair value the Group uses its judgement to select suitable 
valuation techniques and make assumptions which are mainly based on 
market conditions existing at the balance sheet date. 

Changes in fair value are recognised directly in the income statement, 
except for the effective portion of gains or losses on derivative financial 
instruments designated as a hedge of net investment in foreign 
operations, in which case they are recognised in other comprehensive 
income. Where derivative financial instruments are designated as a fair 
value hedge, the relevant fair value movements on the hedged item are 
also taken to the income statement. 

Share capital 

Ordinary shares are classified as equity. Incremental costs directly 
attributable to the issue of new ordinary shares are shown in equity as a 
deduction, net of tax, from the proceeds. 

Dividends 

Dividends are recognised when they become legally payable. In the case 
of interim dividends to owners, this is the date of payment. In the case of 
final dividends, this is when declared by shareholders at the AGM. 

Convertible bonds 

Convertible bonds are assessed on issue, based on their terms and in 
accordance with IAS 32, to identify their classification as a financial 
liability, as equity or as a compound financial instrument with both 
debt and equity components. Each bond is assessed separately and 
the detailed accounting treatment of each is given in note 33. 

Treasury shares 

Investments held in the Company’s own shares are deducted from 
equity at cost. Where such shares are subsequently sold, any 
consideration received is recognised directly in equity. 

Current/non-current classification 

Current assets include assets held primarily for trading purposes, 
cash and cash equivalents, and assets expected to be realised in, 
or intended for sale or consumption in, the course of the Group’s 
operating cycle. All other assets are classified as non-current assets. 

Current liabilities include liabilities held primarily for trading purposes, 
liabilities expected to be settled in the course of the Group’s operating 
cycle and those liabilities due within one year from the reporting date. 
All other liabilities are classified as non-current liabilities. 

Business combinations 

Business combinations are accounted for under IFRS 3 using the 
acquisition method of accounting. The consideration transferred for 
the acquisition of a subsidiary is the fair values of the assets transferred, 
the liabilities incurred and the equity interests issued by the Group. 
The consideration transferred includes the fair value of any asset or 
liability resulting from a contingent consideration arrangement. Costs 
associated with the acquisition are expensed as incurred. Identifiable 
assets and liabilities assumed in a business combination are measured 
initially at their fair values at the acquisition date. 

Goodwill arising on an acquisition comprises the excess of the 
consideration over the fair value of the identifiable assets and liabilities 
acquired. Where the fair value of the identifiable assets and liabilities 
acquired exceeds the consideration this difference is recognised in the 
income statement at the date of the acquisition. 

105

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
Notes to the accounts 
continued 

3 Segmental reporting 

Operating segments are determined based on the internal reporting and operational management of the Group. The Group is a UK shopping centre 
focused business and has one reportable operating segment being UK Shopping Centres.  

The principal profit indicator used to measure performance is net rental income. All net rental income is derived from the UK Shopping Centres 
segment and an analysis of net rental income is given in note 5. 

The Group’s geographical segments are set out below. This represents where the Group’s assets reside and where revenues are generated. In the case 
of investments this reflects where the investee is located. 

United Kingdom 
United States 
India 

1  Non-current assets excluding financial instruments and deferred tax assets.  

2012 
£m 

525.7
–
–

525.7

Revenue 

2011  
£m 

516.1 
– 
– 

516.1 

Non-current assets1

2012  
£m 

7,123.3 
146.9 
42.8 

7,313.0 

2011 
£m 

7,001.7
168.5
35.2

7,205.4

4 Revenue 

Rent receivable and service charge income 
Sale of trading property 

Revenue 

5 Net rental income 

Rent receivable 
Service charge income 

Rent payable 
Service charge costs 
Other non-recoverable costs 

Net rental income 

6 Net other income 

Sale of trading property 
Cost of sales 
Profit on sale of trading property 
Write down of trading property 
Dividends received from other investments 

Net other income 

7 Revaluation and sale of investment and development property 

Revaluation of investment and development property (note 20) 
Sale of investment property  

Revaluation and sale of investment and development property 

106

2012  
£m 

520.1 
5.6 

525.7 

2012  
£m 

441.4 
78.7 

520.1 
(24.7) 
(87.0) 
(45.8) 
362.6 

2012  
£m 

5.6 
(5.5) 
0.1 
(0.1) 
6.3 
6.3 

2012  
£m 

40.8 
0.1 
40.9 

2011 
£m 

508.6
7.5

516.1

2011 
£m 

432.1
76.5

508.6
(25.5)
(82.1)
(37.0)
364.0

2011 
£m 

7.5
(7.0)
0.5
(1.0)
8.3
7.8

2011 
£m 

63.0
–
63.0

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8 Administration expenses – exceptional 

Exceptional administration expenses in the year totalled £1.1 million (2011 – £20.9 million) which primarily relates to costs of acquisitions. 
For 2011, £17.6 million related to the acquisition and integration of The Trafford Centre and £3.3 million related to the acquisition of 
Broadmarsh, Nottingham. 

9 Operating profit 

Operating profit is arrived at after charging: 

Staff costs (note 10) 
Depreciation 
Remuneration paid to the Company’s auditors (note 11) 

10 Employees’ information 

Wages and salaries 
Social security costs 
Other pension costs  
Share based payments (note 49) 

2012 
£m 

30.5
1.5
0.4

Group
2012
£m 

23.1
2.4
1.2
3.8
30.5

2011 
£m 

29.0
1.4
1.4

Group
2011
£m 

22.0
2.3
1.1
3.6
29.0

At 31 December 2012 the number of persons employed by the Group was 645 (2011 – 624). The Company had no employees during the year (2011 – 
nil). The monthly average number of persons employed by the Group during the year was: 

Head Office 
Shopping Centres 

2012 
Number 

144
494
638

2011 
Number 

134
452
586

The Trafford Centre employees are included from 28 January 2011 and Broadmarsh, Nottingham employees from 1 December 2011. 

11 Auditors’ remuneration 
The analysis of the auditor’s remuneration is as follows: 

Fees payable to the Company’s auditor and their associates for: 

The audit of the Company’s annual accounts 
Other services to the Group – statutory audit of the Company’s subsidiaries 

Fees related to the audit of the Company and its subsidiaries 

Audit-related assurance services1 

Total fees for audit and audit related services 

Other assurance services 
Corporate finance advisory services2 

Total non-audit related services 

Fees payable to the Company’s auditor and their associates in respect of associated pension schemes: 

Statutory audit 

Total fees 

2012 
£000 

202
136
338
40

378
18
50
68

–

446

2011 
£000 

218
132
350
40

390
9
958
967

5

1,362

Fees payable to PricewaterhouseCoopers LLP and their associates for non-audit services to the Company are not required to be disclosed because 
the consolidated financial statements are required to disclose such fees on a consolidated basis. 

1  Relates to fees in respect of the review of the Group’s Interim Report. 

2 

In 2011, fees payable to the principal auditor in respect of corporate finance advisory services include fees in respect of work required for the Group’s 
acquisition of The Trafford Centre. PwC were selected to undertake this work after consideration of the impact this may have on their independence, which 
it was concluded would not be impinged by undertaking the work. A further consideration in the decision was, given their prior knowledge of the Group’s 
activities, PwC were best placed to carry out the work, taking into account general efficiency and cost effectiveness. Fees of this type are ad hoc in nature 
and occur in respect of major corporate transactions. 

107

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

12 Finance costs 

On bank loans and overdrafts 
On convertible bonds 
On obligations under finance leases 

Finance costs 

No finance costs were capitalised in the year ended 31 December 2012 (2011 – nil). 

13 Other finance costs 

Amortisation of Metrocentre compound financial instrument 
Cost of termination of derivative financial instruments and other fees1 
Foreign currency movements1 
Other finance costs 

2012  
£m 

191.7 
1.8 
3.8 
197.3 

2012  
£m 

6.9 
59.9 
1.1 

67.9 

2011 
£m 

195.0
–
3.9
198.9

2011 
£m 

7.9
47.8
–

55.7

1  Amounts totalling £61.0 million in the year ended 31 December 2012 are treated as exceptional and therefore excluded from the calculation of underlying 

earnings (2011 – £47.8 million).  

14 Change in fair value of financial instruments  

On convertible bonds designated as at fair value through profit or loss (note 33) 
On derivative financial instruments 

Change in fair value of financial instruments 

2012  
£m 

(11.0) 
41.5 
30.5 

2011 
£m 

–
(193.4)
(193.4)

15 Taxation 
Taxation for the year: 

Overseas taxation 

Current tax 
Deferred tax: 

On other investments 
On derivative financial instruments 
On other temporary differences 

Deferred tax 

Total tax (credit)/expense 

2012  
£m 

0.5 
0.5 

(1.9) 
(3.2) 
(0.5) 
(5.6) 

(5.1) 

The tax credit (2011 – expense) for the year is lower (2011 – lower) than the standard rate of corporation tax in the UK. The differences are 
explained below: 

Profit before tax 
Profit before tax multiplied by the standard rate in the UK of 24.5% (2011 – 26.5%) 
Disposals of properties and investments 
Prior year deferred tax items 
REIT exemption – corporation tax 
REIT exemption – deferred tax 
Non-deductable and other items 
Unprovided deferred tax 
Reduction in tax rate 

Total tax (credit)/expense 

108

2012 
£m 

152.6 
37.4 
(0.5) 
(4.0) 
(29.7) 
(25.2) 
(0.5) 
11.5 
5.9 
(5.1) 

2011 
£m 

0.3
0.3

7.6
(4.1)
(1.2)
2.3

2.6

2011 
£m 

27.2
7.2
(8.9)
(7.2)
(27.8)
(0.2)
3.1
32.6
3.8
2.6

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
15 Taxation (continued) 
Tax relating to components of other comprehensive income is analysed as: 

Current tax: 

On disposal of other investments 

Deferred tax: 

On other investments 
On derivative financial instruments 

Tax relating to components of other comprehensive income 

2012 
£m 

0.4

5.6
–

6.0

2011 
£m 

–

(2.6)
0.3

(2.3)

16 Profit for the year attributable to owners of Intu Properties plc 

Profits of £23.8 million are dealt with in the accounts of the Company in respect of the year (2011 – losses of £44.1 million). No income statement is 
presented for the Company as permitted by Section 408 of the Companies Act 2006. 

17 Dividends 

Ordinary shares 
Prior year final dividend paid of 10.0 pence per share (2011 – 10.0 pence per share) 
Interim dividend paid of 5.0 pence per share (2011 – 5.0 pence per share) 

Dividends paid 

Proposed final dividend of 10.0 pence per share 

2012 
£m 

85.4
42.4

127.8

85.7

2011 
£m 

85.2
42.6

127.8

Following the approval by shareholders of the Scrip Dividend Scheme at the Annual General Meeting on 25 April 2012, the Company offered 
shareholders the option to receive ordinary shares in lieu of the cash 2012 interim dividend of 5 pence per share which was payable wholly as a PID. 
In acquiring such shares, shareholders do not incur dealing or stamp duty reserve tax costs. Shareholders retain the right to receive the cash dividend 
instead of the share alternative. 

As a result of elections made by shareholders, 3,268,230 new ordinary shares of 50 pence each were issued on 20 November 2012 in lieu of dividends 
otherwise payable, and £10.6 million of cash was retained in the business.  

Details of the shares in issue and dividends waived are given in notes 38 and 40. 

18 Earnings per share 
(a) Earnings per share 

Basic and diluted earnings per share as calculated in accordance with IAS 33 Earnings per Share. 

Basic earnings per share1 
Dilutive convertible bonds, share options and share awards 

Diluted earnings per share 

2012 

Earnings
£m 

150.1

7.6

157.7

Shares
million 

853.8

56.2

910.0

Pence per 
share 

Earnings 
£m 

17.6p 

17.3p 

24.7 

– 

24.7 

Shares
million 

840.9

0.6

841.5

2011 

Pence per
share 

2.9p

2.9p

1  The weighted average number of shares used for the calculation of basic earnings per share has been adjusted for shares held in the ESOP and treasury 
shares. Basic earnings per share are stated after deducting interest on convertible bonds recognised directly in equity of £5.8 million in the year ended 
31 December 2012 (2011 – £5.3 million) in accordance with IAS 33 Earnings per Share. 

109

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

18 Earnings per share (continued) 
(b) Headline earnings per share 

Headline earnings per share has been calculated and presented as required by the Johannesburg Stock Exchange listing requirements. 

Basic earnings 
Remove: 
Revaluation and sale of investment and development property (including 
associates) 
Sale and impairment of other investments 
Gain on acquisition of subsidiaries 
Impairment of goodwill 
Gain on sale of subsidiaries 
Headline earnings/(loss) 
Dilution2 
Diluted headline earnings/(loss) 

Weighted average number of shares 
Dilution2 
Diluted weighted average number of shares 
Headline earnings/(loss) per share (pence) 

Diluted headline earnings/(loss) per share (pence) 

1  Net of tax and non-controlling interest. 

Gross
£m 

(41.5)
(1.4)
(2.3)
8.8
–

2012  
Net1 
£m  

150.1 

(40.1) 
(1.8) 
(2.3) 
8.8 
– 
114.7 
7.6 
122.3 

853.8 
56.2 

910.0 
13.4p 

13.4p 

Gross 
£m 

(72.1) 
8.7 
(52.9) 
– 
(40.4) 

2011 
1
Net
£m 

24.7

(66.3)
8.7
(52.9)
–
(25.9)
(111.7)
–
(111.7)

840.9
0.6

841.5
(13.3)p

(13.3)p

2  The dilution impact is required to be included as for earnings per share as calculated in note 18(a) even where this is not dilutive for headline earnings 

per share. 

(c) Underlying earnings per share 

Underlying earnings per share is a non-GAAP measure but has been included as it is considered to be a key measure of the Group’s performance and 
an indication of the extent to which dividend payments are supported by current earnings. 

Basic earnings per share from continuing operations1 
Remove: 
Revaluation and sale of investment and development property 
Share of associates’ revaluation of investment 
and development property 
Gain on acquisition of subsidiaries 
Gain on sale of subsidiaries 
Sale and impairment of other investments 
Impairment of goodwill 
Distribution of shares received from Provogue 
Exceptional administration expenses 
Exceptional finance costs 
Change in fair value of financial instruments 
Tax on the above 
Non-controlling interest in respect of the above 

Underlying earnings per share 
Dilutive convertible bonds, share options and share awards 

Underlying, diluted earnings per share 

Earnings
£m 

150.1

Shares
million 

853.8

2012 

Pence per
share 

17.6p

Earnings 
£m 

24.7 

Shares
million 

840.9

2011 

Pence per
share 

2.9p

(40.9)

(0.6)
(2.3)
–
(1.4)
8.8
(10.2)
1.1
61.0
(30.5)
(5.9)
8.5
137.7
7.6

145.3

853.8
56.2

910.0

(4.8)p

(63.0) 

(0.1)p
(0.3)p
–
(0.2)p
1.0p 
(1.2)p
0.2p
7.2p
(3.6)p
(0.7)p
1.0p
16.1p

16.0p

(9.1) 
(52.9) 
(40.4) 
8.7 
– 
– 
20.9 
47.8 
193.4 
1.6 
6.9 
138.6 
– 

138.6 

840.9
0.6

841.5

(7.5)p

(1.1)p
(6.3)p
(4.8)p
1.1p
–
–
2.5p
5.7p
23.0p
0.2p
0.8p
16.5p

16.5p

1  The weighted average number of shares used for the calculation of basic earnings per share has been adjusted for shares held in the ESOP and treasury 
shares. Basic earnings per share are stated after deducting interest on convertible bonds recognised directly in equity of £5.8 million in the year ended 
31 December 2012 (2011 – £5.3 million) in accordance with IAS 33 Earnings per Share. 

110

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19 Net assets per share 
NAV per share (diluted, adjusted) is a non-GAAP measure but has been included as it is considered to be a key measure of the Group’s performance. 

NAV per share attributable to owners of Intu Properties plc1 
Dilutive convertible bonds, share options and share awards 

Diluted NAV per share 
Remove: 
Fair value of derivative financial instruments (net of tax) 
Deferred tax on investment and development property 
and other investments 
Non-controlling interest in respect of the above 
Add: 
Non-controlling interest recoverable balance not recognised 

NAV per share (diluted, adjusted) 

Net
assets
£m 

2,977.0
–

2,977.0

481.8

8.7
(23.4)

2012 

NAV per 
share 
(pence) 

347p 

332p 

Net 
assets 
£m 

2,922.1 
3.8 

2,925.9 

Shares
million 

857.1
39.6

896.7

Shares
million 

853.5
40.3

893.8

54p 

520.9 

1p 
(3)p 

5.0 
(30.4) 

71.3
3,515.4

896.7

8p 
392p 

71.3 
3,492.7 

893.8

1  The number of shares used has been adjusted for shares held in the ESOP and treasury shares. 

20 Investment and development property 

At 1 January 2011 
Trafford Centre acquisition 
Broadmarsh acquisition 
Additions 
Disposals 
Transferred from trading property 
Surplus on revaluation 

At 31 December 2011 
Additions  
Disposals 
Surplus on revaluation 

At 31 December 2012 

Balance sheet carrying value of investment and development property 
Adjustment in respect of tenant incentives 
Adjustment in respect of head leases 

Market value of investment and development property 

Freehold 
£m 

2,679.9 
1,650.0 
– 
12.3 
– 
11.5 
41.5 

4,395.2 
62.0 
(0.6) 
63.7 

4,520.3 

Leasehold
£m 

2,371.1
–
65.0
45.0
(1.6)
–
21.5

2,501.0
11.8
(0.5)
(22.9)

2,489.4

2012 
£m 

7,009.7
100.4
(37.0)
7,073.1

2011 

NAV per
share
(pence) 

342p

327p

58p

1p
(3)p

8p
391p

Total
£m 

5,051.0
1,650.0
65.0
57.3
(1.6)
11.5
63.0

6,896.2
73.8
(1.1)
40.8

7,009.7

2011 
£m 

6,896.2
101.9
(37.9)
6,960.2

The fair value of the Group’s investment and development property as at 31 December 2012 was determined by independent external valuers at that 
date. The valuations conform with the Royal Institution of Chartered Surveyors (‘RICS’) Valuation Standards 8th Edition and with IVS 1 of 
International Valuation Standards, and were arrived at by reference to market transactions for similar properties. 

The main assumptions underlying the valuations are in relation to market rent, taking into account forecast growth rates and yields based on known 
transactions for similar properties, vacancies, letting periods and likely incentives offered to tenants. 

111

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

20 Investment and development property (continued) 
A summary of the market value of investment and development property by valuer is given below: 

DTZ 
Cushman & Wakefield 
CBRE 
Knight Frank 
Others 

2012  
£m 

4,056.2 
1,800.0 
936.1 
275.8 
5.0 

7,073.1 

2011
£m 

4,012.6
1,700.0
931.4
286.3
29.9

6,960.2

Valuation fees are based on a fixed amount agreed between the Group and the valuers and are independent of the portfolio value. 

There are certain restrictions on the realisability of investment property where a credit facility secured on that property is in place. In most 
circumstances the Group can realise up to 50 per cent without restriction providing the Group continues to manage the asset. Realising an amount 
in excess of this would trigger a change of control and mandatory repayment of the facility. 

21 Plant and equipment 

Group 

At 1 January 
Trafford Centre acquisition 
Additions 
Charge for the year 

At 31 December 

Company 

At 1 January 
Additions 
Charge for the year 

At 31 December 

Cost
£m 

9.8
–
2.0
–
11.8

Cost
£m 

6.8
1.2
–
8.0

Accumulated
depreciation
£m 

(4.7)
–
–
(1.5)
(6.2)

Accumulated 
depreciation
£m 

(1.9)
–
(1.4)
(3.3)

2012 

Net
£m 

5.1
–
2.0
(1.5)
5.6

2012 

Net
£m 

4.9
1.2
(1.4)
4.7

Cost 
£m 

7.4 
0.4 
2.0 
– 
9.8 

Cost 
£m 

4.8 
2.0 
– 
6.8 

Accumulated 
depreciation 
£m 

(3.3) 
– 
– 
(1.4) 
(4.7) 

Accumulated 
depreciation 
£m 

(0.7) 
– 
(1.2) 
(1.9) 

2011 

Net
£m 

4.1
0.4
2.0
(1.4)
5.1

2011 

Net
£m 

4.1
2.0
(1.2)
4.9

Plant and equipment consists of vehicles, fixtures, fittings and other office equipment. 

22 Investment in group companies 

Company 

At 1 January 
Additions 
Disposals 
Redemption of preference shares 
Impairment in the year 
Impairment reversed in the year 

At 31 December 

Cost
£m 

Accumulated 
impairment
£m 

3,130.9
–
–
–
–
–

3,130.9

(963.0)
–
–
–
–
57.6

(905.4)

2012 

Net
£m 

2,167.9
–
–
–
–– 

57.6

2,225.5

Cost 
£m 

Accumulated 
impairment 
£m 

2,655.3 
702.7 
(6.6) 
(220.5) 
(32.3) 
– 

3,130.9 

(953.7) 
– 
4.8 
– 
(32.3)
18.2 

(963.0) 

2011 

Net
£m 

1,701.6
702.7
(1.8)
(220.5)

18.2

2,167.9

Additions in the year ended 31 December 2011 reflect the Trafford Centre acquisition. Details of principal subsidiary undertakings are provided in 
note 46. 

112

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
23 Joint ventures 

Summarised income statement 
Revenue 

Net rental income 
Revaluation and sale of investment and development property 
Net finance costs 

Profit for the year 

Summarised balance sheet 
Investment and development property 
Other non-current assets 
Current assets 
Partners’ loans 
Current liabilities 
Non-current liabilities 

Net assets  

Summarised income statement 
Revenue 

Net rental income 
Net other income 
Revaluation and sale of investment and development property 
Net finance costs 
Profit for the year 

Summarised balance sheet 
Investment and development property 
Other non-current assets 
Current assets 
Partners’ loans 
Current liabilities 
Non-current liabilities 
Net assets/(liabilities)  

St David’s
Limited 
Partnership
£m 

Xscape  
Braehead 
Partnership  
£m 

24.1

11.2
(4.4)
(4.6)

2.2

263.4
11.5
10.4
(72.0)
(10.2)
(96.1)

107.0

2.4 

1.5 
1.6 
(1.4) 

1.7 

– 
– 
– 
– 
– 
– 

– 

St David’s 
Limited 
Partnership
£m 

Xscape 
Braehead 
Partnership 
£m 

23.6

9.4
0.6
5.3
(7.5)
7.8

272.6
1.0
31.5
(38.6)
(65.1)
(96.3)
105.1

2.4 

1.6 
– 
1.4 
(1.3) 
1.7 

24.1 
2.6 
1.4 
(8.4) 
(3.4) 
(22.7) 
(6.4) 

2012 

Total
£m 

27.0

13.4
(3.3)
(6.0)

4.1

275.6
11.5
11.3
(72.0)
(10.3)
(96.1)

120.0

2011 

Total
£m 

26.0

11.2
0.6
6.7
(8.8)
9.7

296.7
3.6
33.2
(47.0)
(68.5)
(119.0)
99.0

Other
£m 

0.5

0.7
(0.5)
–

0.2

12.2
–
0.9
–
(0.1)
–

13.0

Other
£m 

–

0.2
–
–
–
0.2

–
–
0.3
–
–
–
0.3

Joint ventures are accounted for in the consolidated financial statements using proportional consolidation. The Group’s share of the assets, liabilities, 
income and expenditure of joint ventures is included on a line-by-line basis.  

The joint ventures include the St David’s Limited Partnership, Centaurus Retail LLP and the Xscape Braehead Partnership. The St David’s Limited 
Partnership was established in 2004 for investment in the existing St David’s shopping centre, Cardiff, and development of a 967,500 sq. ft. retail-
led mixed-use extension. Included in the ‘Other’ category above is Centaurus Retail LLP which was established on 20 April 2012 for investment 
in the Centaurus Retail Park, Bristol. The Xscape Braehead Partnership was established in 2004, for investment in the Xscape Leisure Scheme 
at Braehead, Renfrew, Glasgow. On 24 December 2012 the Group acquired the remaining 50 per cent interest in the Xscape Braehead Partnership 
(see note 41) from which date this has been accounted for as a subsidiary. 

All joint ventures are held with other joint venture investors on a 50:50 basis. 

113

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

24 Investment in associate companies 

At 1 January 
Share of profit of associates 
Distribution of shares received from Provogue 
Foreign exchange movements 

At 31 December 

Group  
2012  
£m 

32.5 
0.9 
10.2 
(2.7) 
40.9 

Group 
2011 
£m 

28.8
9.0
–
(5.3)
32.5

Investment in associates comprises a 32.4 per cent holding in the ordinary shares of Prozone Capital Shopping Centres Limited (incorporated in India) 
and a 20 per cent holding in the ordinary shares of Lewis’s Liverpool LLP. In the first half of the year, Provogue (India) Limited, in which the Group 
holds a 9.9 per cent stake, undertook a demerger of its 75 per cent holding in Prozone Capital Shopping Centres Limited. The demerger was achieved 
by way of a distribution of shares in Prozone. The receipt of additional shares is treated as a distribution valued at £10.2 million. The demerger 
increased the Group’s holding in Prozone from 25 per cent to 32.4 per cent.  

The equity method of accounting is applied using the results of Prozone Capital Shopping Centres Limited for the year to 30 September as 
31 December information is not available in time for these financial statements. Those results include property valuations as at 31 March 2012 
as valuations are only produced once a year in accordance with reporting requirements. The property valuation was determined by professionally 
qualified external valuers using the ‘Red Book’ guidelines. 

25 Other investments 

At 1 January 
Additions 
Disposal of Equity One shares 
Reclassification to intercompany 
Revaluation 
Foreign exchange movements 

At 31 December 

Group 
2012  
£m 

171.2 
– 
(44.4) 
– 
28.7 
(6.7) 

148.8 

In 2011 additions represent the consideration received for C&C US consisting of 11.35 million units, convertible into Equity One shares, and 
4.05 million shares in Equity One. The reclassification to intercompany results from the Trafford Centre acquisition and the elimination of the 
Group’s investment in Trafford CMBS. 

On 6 March 2012, the Group disposed of its 4.05 million shares in Equity One for £48.7 million. 

All these investments are available-for-sale investments and are analysed by type of investment as follows: 

Listed securities – equity 
Unlisted securities – equity 

Other investments 

Group 
2012  
£m 

1.9 
146.9 

148.8 

Group
2011 
£m 

16.4
179.3
–
(6.3)
(17.3)
(0.9)

171.2

Group
2011 
£m 

47.1
124.1

171.2

Listed investments are accounted for at fair value using the bid market value at the reporting date. The Group’s unlisted securities all relate to a 
US venture controlled by Equity One. This is accounted for as an available-for-sale investment as the Group does not have control nor significant 
influence over the venture. The fair value of the investment in measured by reference to the Equity One listed share price as the Group can convert 
its investment into shares in Equity One. 

114

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
26 Trading property 

Property in development 
Completed property 

Trading property 

Group 
2012 
£m 

–
2.1

2.1

Group 
2011 
£m 

3.2
4.3

7.5

The estimated replacement cost of trading property, based on their market value at 31 December 2012, is £2.1 million (2011 – £7.5 million). 

27 Trade and other receivables 

Current 
Trade receivables 
Amounts owed by subsidiary undertakings 
Other receivables 
Prepayments and accrued income 

Trade and other receivables – current 

Non-current 
Other receivables 
Prepayments and accrued income 

Trade and other receivables – non-current 

Group 
2012 
£m 

16.8
–
18.3
31.5

66.6

8.9
95.1

104.0

 Group  
2011 
£m 

Company 
2012 
£m 

Company 
2011 
£m 

19.2 
– 
23.4 
27.0 

69.6 

0.2 
90.9 

91.1 

–
678.3
0.8
1.4

680.5

0.4
–

0.4

–
562.8
0.9
1.1

564.8

1.2
–

1.2

Included within prepayments and accrued income for the Group are tenant lease incentives of £100.4 million (2011 – £101.9 million). 

Amounts owed by subsidiary undertakings are unsecured, repayable on demand and for amounts falling within formalised loan agreements, 
interest bearing.  

28 Cash and cash equivalents 

Unrestricted cash 
Restricted cash 

Cash and cash equivalents 

Group 
2012 
£m 

186.1
2.0
188.1

Group  
2011  
£m 

88.2 
2.5 
90.7 

Company 
2012 
£m 

Company 
2011 
£m 

0.3
–
0.3

0.5
–
0.5

Restricted cash reflects amounts held to match the 2014 loan notes shown within borrowings. 

115

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
Notes to the accounts  
continued 

29 Derivative financial instruments 
Derivative financial instruments – assets 

Held for 
trading
£m 

Hedging 
instruments
£m 

0.7

0.7

21.2
21.2

–

–

–
–

Held for 
trading
£m 

Hedging 
instruments
£m 

–
(19.1)

(19.1)

(495.8)
(495.8)

–
–

–

–
–

Held for 
trading
£m 

Hedging 
instruments
£m 

(11.0)
(11.0)

–
–

Group 

Current 
Interest rate swaps 

Non-current 
Interest rate swaps 

Derivative financial instruments – liabilities 

Group 

Current 
Forward foreign exchange contracts 
Interest rate swaps 

Non-current 
Interest rate swaps 

Company 

Non-current 
Bondholder option (note 33) 

30 Trade and other payables 

Current 
Rents received in advance 
Trade payables 
Amounts owed to subsidiary undertakings 
Accruals and deferred income 
Other payables 
Other taxes and social security 

Trade and other payables 

2012 

Total
£m 

0.7

0.7

21.2
21.2

2012 

Total
£m 

–
(19.1)

(19.1)

(495.8)
(495.8)

2012 

Total
£m 

(11.0)
(11.0)

Group 
2012 
£m 

95.0
2.0
–
78.1
17.6
28.2

220.9

Held for  
trading 
£m 

Hedging  
instruments 
£m 

– 

– 

22.7 
22.7 

– 

– 

– 
– 

Held for  
trading 
£m 

Hedging  
instruments 
£m 

– 
(15.9) 

(15.9) 

(535.7) 
(535.7) 

(11.6) 
– 

(11.6) 

– 
– 

Held for  
trading 
£m 

Hedging  
instruments 
£m 

– 
– 

– 
– 

2011 

Total
£m 

–

–

22.7
22.7

2011 

Total
£m 

(11.6)
(15.9)

(27.5)

(535.7)
(535.7)

2011 

Total
£m 

–
–

Group  
2011  
£m 

98.4 
5.4 
– 
112.0 
17.3 
45.2 

278.3 

Company  
2012  
£m 

Company 
2011 
£m 

– 
– 
329.7 
6.5 
0.3 
8.1 

344.6 

–
–
27.9
6.8
–
8.6

43.3

Amounts owed to subsidiary undertakings are unsecured, repayable on demand and for amounts falling within formalised loan agreements, 
interest bearing. 

116

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31 Borrowings 

Group 

Current  
Bank loans and overdrafts 
Commercial mortgage backed securities 
(‘CMBS’) notes 
Loan notes 2014 
CSC bonds 2013 
Current borrowings, excluding finance leases 
Finance lease obligations 

Non-current 
CMBS notes 2015 
CMBS notes 2022 
CMBS notes 2029 
CMBS notes 2033 
CMBS notes 2035 
Bank loan 2014 
Bank loans 2016 
Bank loan 2017 
Debentures 2027  
2.5% convertible bonds 2018 (note 33) 

Non-current borrowings, excluding finance 
leases and Metrocentre compound financial 
instrument 
Metrocentre compound financial instrument 
Finance lease obligations 

Total borrowings 

Cash and cash equivalents 

Net debt 

Carrying 
value 
£m 

 Secured 
£m 

 Unsecured 
£m 

21.2

40.8
–
–
62.0
3.4

65.4

960.6
51.8
97.9
375.4
181.8
135.4
720.7
502.5
227.4
–

3,253.5
–
33.6

3,287.1

3,352.5

21.2

40.8
2.0
26.8
90.8
3.4

94.2

960.6
51.8
97.9
375.4
181.8
135.4
720.7
502.5
227.4
311.0

3,564.5
153.5
33.6

3,751.6

3,845.8

(188.1)

3,657.7

–

–
2.0
26.8
28.8
–

28.8

–
–
–
–
–
–
–
–
–
311.0

311.0
153.5
–

464.5

493.3

Fixed  
rate  
£m 

– 

6.6 
2.0 
26.8 
35.4 
3.4 

38.8 

– 
51.8 
97.9 
375.4 
– 
– 
– 
– 
227.4 
311.0 

Floating 
rate 
£m 

21.2

34.2
–
–
55.4
–

55.4

960.6
–
–
–
181.8
135.4
720.7
502.5
–
–

2012 

Fair 
value 
£m 

21.2

41.3
2.0
26.9
91.4
3.4

94.8

907.4
58.8
111.0
441.1
172.0
135.4
720.7
502.5
206.5
311.0

1,063.5 
153.5 
33.6 

1,250.6 

1,289.4 

2,501.0
–
–

2,501.0

2,556.4

3,566.4
153.5
33.6

3,753.5

3,848.3

Net external debt (adjusted for Metrocentre compound financial instrument) at 31 December 2012 was £3,504.2 million (2011 – £3,374.2 million). 

The Group substantially eliminates its interest rate exposure to floating rate debt through interest rate swaps as illustrated in note 35. 

The market value of assets secured as collateral against borrowings at 31 December 2012 is £6,950.1 million.  

The fair values have been established using the market value, where available. For those instruments without a market value, a discounted cash 
flow approach has been used. 

The Company had no borrowings as at 31 December 2012. 

117

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

31 Borrowings (continued) 

Carrying 
value 
£m 

 Secured 
£m 

 Unsecured 
£m 

Fixed  
rate  
£m 

Floating  
rate  
£m 

Group 

Current  
Bank loans and overdrafts 
Commercial mortgage backed securities 
(‘CMBS’) notes 
Loan notes 2014 

Current borrowings, excluding finance leases 
Finance lease obligations 

Non-current 
CMBS notes 2015 
CMBS notes 2022 
CMBS notes 2029 
CMBS notes 2033 
CMBS notes 2035 
Bank loan 2014 
Bank loans 2016 
Bank loan 2017 
Debentures 2027  
CSC bonds 2013 
Non-current borrowings, excluding finance 
leases and Metrocentre compound financial 
instrument 
Metrocentre compound financial instrument 
Finance lease obligations 

Total borrowings 
Cash and cash equivalents 

Net debt 

18.5

41.1
–

59.6
3.3

62.9

994.4
52.1
103.1
380.4
179.5
114.8
779.9
506.8
227.1
–

3,338.1
–
34.6
3,372.7

3,435.6

18.5

41.1
2.5

62.1
3.3

65.4

994.4
52.1
103.1
380.4
179.5
114.8
779.9
506.8
227.1
26.8

3,364.9
146.6
34.6
3,546.1

3,611.5
(90.7)

3,520.8

–

–
2.5

2.5
–

2.5

–
–
–
–
–
–
–
–
–
26.8

26.8
146.6
–
173.4

175.9

– 

4.1 
2.5 

6.6 
3.3 

9.9 

– 
52.1 
103.1 
380.4 
– 
– 
– 
– 
227.1 
26.8 

789.5 
146.6 
34.6 
970.7 

980.6 

Net external debt (adjusted for Metrocentre compound financial instrument) at 31 December 2011 was £3,374.2 million. 

Company 
Non-current 
Bank loan 2016 

Total borrowings  

Cash and cash equivalents 
Net debt 

Carrying
value
£m 

45.0

45.0
45.0

(0.5)
44.5

Secured
£m 

Unsecured
£m 

45.0

45.0
45.0

–

–
–

The maturity profile of gross debt (excluding finance leases) is as follows: 

Wholly repayable within one year 
Wholly repayable in more than one year but not more than two years 
Wholly repayable in more than two years but not more than five years 
Wholly repayable in more than five years 

Group
2012
£m 

90.8
194.6
2,180.2
1,343.2
3,808.8

Fixed 
rate 
£m 

– 

– 
– 

Group 
2011 
£m 

62.1 
87.2 
1,893.3 
1,531.0 
3,573.6 

2011 

Fair 
value 
£m 

18.5

38.1
2.5

59.1
3.3

62.4

843.7
56.7
110.6
404.6
167.4
114.8
779.9
506.8
215.5
26.9

18.5 

37.0 
– 

55.5 
– 

55.5 

994.4 
– 
– 
– 
179.5 
114.8 
779.9 
506.8 
– 
– 

2,575.4 
– 
– 
2,575.4 

2,630.9 

3,226.9
146.6
34.6
3,408.1

3,470.5

Floating 
rate 
£m 

45.0 

45.0 
45.0 

2011 

Fair
value
£m 

45.0

45.0
45.0

Company 
2012 
£m 

Company
2011
£m 

– 
– 
– 
– 
– 

–
–
45.0
–
45.0

Certain borrowing agreements contain financial and other conditions that, if contravened, could alter the repayment profile. During the year there 
were no breaches of these conditions. 

The Group has undrawn committed borrowing facilities. As at 31 December 2012 the Group had available facilities of £375.0 million of which 
£375.0 million was undrawn (2011 – undrawn £330.0 million) expiring in 2018. 

118

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31 Borrowings (continued) 
Finance lease disclosures: 

Minimum lease payments under finance leases fall due: 
Not later than one year 
Later than one year and not later than five years 
Later than five years 

Future finance charges on finance leases 

Present value of finance lease liabilities 

Present value of finance lease liabilities: 
Not later than one year 
Later than one year and not later than five years 
Later than five years 

Group 
2012
£m 

4.8
17.4
68.1

90.3
(53.3)

37.0

3.4
13.2
20.4
37.0

Group
2011
£m 

4.7
17.9
71.3

93.9
(56.0)

37.9

3.3
13.3
21.3
37.9

Finance lease liabilities are in respect of leasehold investment property. A number of the Group’s head leases provide for payment of contingent rent, 
usually a proportion of net rental income, in addition to the rents above. 

32 Movement in net debt 

Group 

Balance at 1 January 2012 
Acquired with businesses 
Borrowings repaid 
Issue of ordinary shares 
Issue of convertible bonds 
Other net cash movements 
Other non-cash movements 

Balance at 31 December 2012 

Group 

Balance at 1 January 2011 
Acquired with businesses  
Borrowings repaid 
Borrowings drawndown 
Issue of ordinary shares 
Issue of convertible bonds 
Other net cash movements 
Other non-cash movements 
Balance at 31 December 2011 

Cash and
cash
equivalents
£m 

Current 
borrowings 
£m 

90.7
1.6
(107.3)
0.1
300.0
(97.0)
–

188.1

(65.4) 
(1.4) 
62.3 
– 
– 
– 
(89.7) 

(94.2) 

Cash and
cash
equivalents
£m 

Current 
borrowings 
£m 

222.3
41.2
(138.2)
101.4
44.7
23.7
(204.4)
–
90.7

(46.0) 
(98.1) 
138.2 
– 
– 
– 
– 
(59.5) 
(65.4) 

Non-
current
borrowings
£m 

(3,546.1)
(21.4)
45.0
–
(300.0)
–
70.9

(3,751.6)

Non-
current
borrowings
£m 

(2,751.5)
(751.8)
–
(101.4)
–
–
–
58.6
(3,546.1)

2012 

Net
debt
£m 

(3,520.8)
(21.2)
–
0.1
–
(97.0)
(18.8)

(3,657.7)

2011 

Net
debt
£m 

(2,575.2)
(808.7)
–
–
44.7
23.7
(204.4)
(0.9)
(3,520.8)

119

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Notes to the accounts  
continued 

33 Convertible bonds 

2.5 per cent convertible bonds (‘the 2.5 per cent bonds’) 

On 4 October 2012 Intu (Jersey) Limited (formerly Capital Shopping Centres (Jersey) Limited) (the ‘Issuer’) issued £300.0 million 2.5 per cent 
Guaranteed Convertible Bonds due 2018 (the ‘Bonds’) at par. The Company has unconditionally and irrevocably guaranteed the due and punctual 
performance by the Issuer of all of its obligations (including payments) in respect of the Bonds and the obligations of the Company, as Guarantor, 
constitute direct, unsubordinated and unsecured obligations of the Company. 

Subject to certain conditions, the Bonds are convertible into preference shares of the Issuer which are automatically transferred to the Company 
in exchange for ordinary shares in the Company or (at the Company’s election) any combination of ordinary shares and cash. The Bonds can be 
converted at any time from 14 November 2012 up to the 20th dealing day before the maturity date. 

The initial exchange price was £4.3752 per ordinary share, a conversion rate of approximately 22,856 ordinary shares for every £100,000 nominal of 
the Bonds. Under the terms of the Bonds, the exchange price is adjusted on the happening of certain events including the payment of dividends by 
the Company. Accordingly, following the declaration of the Company’s 2012 interim dividend of 5.0 pence per ordinary share, the exchange price 
was adjusted to £4.3098 per ordinary share with effect from 17 October 2012. There were no further adjustments to the exchange price in the year 
and so at 31 December 2012 the exchange price was £4.3098 per ordinary share.  

The 2.5 per cent bonds may be redeemed at par at the Company’s option subject to the Company’s ordinary share price having traded at 
30 per cent above the conversion price for a specified period, or at any time once 85 per cent by nominal value of the Bonds originally issued have 
been converted or cancelled. If not previously converted, redeemed or purchased and cancelled, the 2.5 per cent bonds will be redeemed at par 
on 4 October 2018. 

A total of £300.0 million nominal of the Bonds were issued and remain outstanding at 31 December 2012. The Bonds are designated as at fair value 
through profit or loss and so are presented on the balance sheet at fair value with all gains and losses taken to the income statement through the 
changes in fair value of financial instruments line. At 31 December 2012, the fair value of the Bonds was £311.0 million, with the change in fair value 
presented in note 14. The Bonds are listed on the Professional Securities Market. 

During the year interest of £1.8 million in respect of the coupon rate has been recognised on the Bonds within finance costs. 

3.75 per cent convertible bonds (‘the 3.75 per cent bonds’) 

On 28 January 2011 the Company issued £127.6 million, 3.75 per cent perpetual subordinated convertible bonds as part of the consideration for the 
acquisition of The Trafford Centre (note 41). As a condition of the acquisition the Company also issued to the Peel Group £26.7 million of convertible 
bonds for a subscription amount of £23.7 million and an implied issue price of the underlying shares of £3.55 per share. 

A total of £154.3 million of the 3.75 per cent bonds were issued and remain outstanding at 31 December 2012 (2011 – £154.3 million). These are 
accounted for as equity at their fair value on issue which totalled £143.7 million (2011 – £143.7 million). 

The 3.75 per cent bonds can be converted at the option of the bondholder at any time from 28 January 2013 at £4.00 per ordinary share, a 
conversion rate of 250 ordinary shares for every £1,000 nominal. Full conversion would result in 38,579,250 ordinary shares being issued. 

The 3.75 per cent bonds may be redeemed at their principal amount at the Company’s option on 28 January 2014 or any subsequent interest payment 
date thereafter, or at any time once 85 per cent or more of the principal amount of the bonds originally issued have been converted or cancelled. 

During the year interest of £5.8 million (2011 – £5.3 million) has been recognised on these bonds directly in equity. 

34 Operating leases 
The Group earns rental income by leasing its investment properties to tenants under operating leases. 

In the UK the standard shopping centre lease is for a term of 10 to 15 years. Standard lease provisions include service charge payments, recovery of 
other direct costs and review every five years to market rent. Standard turnover based leases have a turnover percentage agreed with each lessee 
which is applied to a retail unit’s annual sales and any excess between the resulting turnover rent and the minimum rent is receivable by the Group.  

The future minimum lease amounts receivable under non-cancellable operating leases for continuing operations are as follows: 

Not later than one year 
Later than one year and not later than five years 
Later than five years 

2012 
£m 

413.5 
1,326.8 
1,649.0 

3,389.3 

2011
£m 

421.6
1,342.6
1,344.5

3,108.7

The income statement includes £0.7 million (2011 – £1.0 million) recognised in respect of expected increased rent resulting from outstanding 
reviews where the actual rent will only be determined on settlement of the rent review. 

120

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
35 Financial risk management 

The Group is exposed to a variety of financial risks arising from the Group’s operations being principally market risk (including interest rate risk, 
foreign exchange and market price risk), liquidity risk and credit risk. 

The majority of the Group’s financial risk management is carried out by the Group treasury department and the policies for managing each of these 
risks and the principal effects of these policies on the results for the year are summarised below. 

Market risk 

a) Interest rate risk 

Interest rate risk comprises of both cash flow and fair value risks. Cash flow interest rate risk is the risk that the future cash flows of a financial 
instrument will fluctuate due to changes in market interest rates. Fair value interest rate risk is the risk that the fair value of financial instruments 
will fluctuate as a result of changes in market interest rates. 

The Group’s interest rate risk arises from borrowings issued at variable rates that expose the Group to cash flow interest rate risk, whereas 
borrowings issued at fixed interest rates expose the Group to fair value interest rate risk. 

Bank debt is typically issued at floating rates linked to LIBOR. Bond debt and other capital market debt are generally issued at fixed rates.  

It is Group policy, and often a requirement of the Group’s lenders, to eliminate substantially all short and medium-term exposure to interest rate 
fluctuations in order to establish certainty over medium-term cash flows by using floating to fixed interest rate swaps. Such swaps have the 
economic effect of converting borrowings from floating to fixed rates.  

As a consequence, the Group is exposed to market price risk in respect of the fair value of its fixed rate interest rate swaps, as discussed in the 
Financial review on pages 44 to 49. 

The table below shows the effects of interest rate swaps on the borrowings profile of the Group: 

Borrowings 
Derivative impact (nominal value of interest rate swaps) 
Net borrowings profile 

Interest rate protection on floating debt 

Fixed
2012
£m 

1,289.4
2,440.4
3,729.8

Floating 
2012 
£m 

2,556.4 
(2,440.4) 
116.0 

95.5% 

Fixed
2011
£m 

980.6
2,476.7
3,457.3

Floating
2011
£m 

2,630.9
(2,476.7)
154.2

94.1%

Group policy is to target interest rate protection within the range of 75 per cent to 100 per cent. 

The weighted average rate for interest rate swaps currently effective is 3.95 per cent (2011 – 4.43 per cent). 

Unallocated and forward starting swaps are excluded from the above calculation. The nominal value of those swaps is £615.0 million. 

The approximate impact of a 50 basis point shift upwards in the level of interest rates would be a positive movement of £101.9 million (2011 – 
£93.6 million) in the fair value of derivatives. The approximate impact of a 50 basis point shift downwards in the level of interest rates would be a 
negative movement of £108.3 million (2011 – £102.7 million) in the fair value of derivatives. Movements in the fair value of derivatives are dealt 
with in the income statement. In practice, a parallel shift in the yield curve is highly unlikely. However, the above sensitivity analysis is a reasonable 
illustration of the possible effect from the changes in slope and shifts in the yield curve that may actually occur. Where the fixed rate derivative 
financial instruments are matched by floating rate debt, the overall effect on Group cash flow of such a movement would be very small. 

Details of interest rate swap contracts in place as at 31 December 2012 are included in the Financial review on page 49, which shows the interest 
cost to the Group will be subject to in the future regardless of changes in market interest rates for the nominal amount of debt in the contract. 

b) Foreign exchange 

Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a functional currency other 
than sterling. It was previously Group policy to eliminate partially the foreign exchange risk through hedging instruments and foreign currency 
denominated borrowings. The Group no longer has operating subsidiaries located overseas with investments now being through associates and 
available for sale investments. As existing swaps matured the decision was taken not to renew these. As at 31 December 2012 no foreign exchange 
hedging arrangements were in place. 

The table summarises the Group exposure to foreign currency risk arising from the Group’s investments at 31 December 2012: 

Net assets  
Derivative impact (nominal forward foreign exchange swaps) 

Net exposure 

There was no ineffectiveness arising as a result of these hedges in either year. 

Group 
2012
INRm 

3,815.4
–

3,815.4

Group 
2011 
INRm 

2,905.7 
– 

2,905.7 

Group 
2012
US$m 

238.6
–

238.6

Group
2011
US$m 

261.8
(140.0)

121.8

The approximate impact of a 10 per cent appreciation in foreign exchange rates would be positive movement of £21.1 million (2011 – £22.6 million) 
on Group reserves. The approximate impact of a 10 per cent depreciation in foreign exchange rates would be a negative movement of £17.2 million 
(2011 – £17.2 million (2011 – £18.5 million) on Group reserves. 

121

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
Notes to the accounts  
continued 

35 Financial risk management (continued) 
Liquidity risk 

Liquidity risk is managed to ensure that the Group is able to meet future payment obligations when financial liabilities fall due. Liquidity analysis 
is conducted to ensure that sufficient headroom is available to meet the Group’s operational requirements and committed investments. The Group 
treasury policy aims to meet this objective through maintaining adequate cash, marketable securities and committed facilities to meet these 
requirements. Undrawn borrowing facilities are detailed in note 31. The Group’s policy is to seek to optimise its exposure to liquidity risk by 
balancing its exposure to interest rate risk and to refinancing risk. In effect the Group seeks to borrow for as long as possible at the lowest 
acceptable cost. 

Group policy is to maintain a weighted average debt maturity of over five years. As at 31 December 2012, the maturity profile of Group debt 
showed an average maturity of six years (2011 – seven years). The Group regularly reviews the maturity profile of its borrowings and seeks to avoid 
bunching of maturities through the regular replacement of facilities and by using a selection of maturity dates. Refinancing risk may be reduced by 
re-borrowing prior to the contracted maturity date, effectively switching liquidity risk for market risk.  

The Group may choose to pre-fund significant capital expenditure by arranging facilities or raising debt in the capital markets and then placing 
surplus funds on deposit until required for the project. Efficient treasury management and strict credit control minimise the costs and risk 
associated with this policy which ensures that funds are available to meet commitments as they fall due. 

The tables below set out the maturity analysis of the Group’s financial liabilities based on the undiscounted contractual obligations to make 
payments of interest and to repay principal (including notional principal in the case of gross settled foreign exchange contracts). Where interest 
payment obligations are based on a floating rate the rates used are those implied by the par yield curve for the relevant currency. Where payment 
obligations are in foreign currencies, the spot exchange rate ruling at the balance sheet date is used. 

Within 1 year
£m 

1–2 years
£m 

(192.2)
(4.8)
(19.7)
(134.4)
24.4

(326.7)

(295.6)
(4.8)
(3.3)
(133.9)
26.2

(411.4)

Within 1 year
£m 

1–2 years
£m 

(158.7)
(4.7)
(22.6)
(225.7)
120.0

(291.7)

(195.4)
(4.7)
(0.1)
(143.2)
40.9

(302.5)

2–5 years  
£m 

(2,427.1) 
(12.6) 
– 
(209.5) 
56.8 

(2,592.4) 

2–5 years  
£m 

(2,189.5) 
(13.2) 
– 
(319.9) 
115.9 

(2,406.7) 

Over 5 years 
£m 

(1,806.8) 
(68.1) 
– 
(558.1) 
400.7 

(2,032.3) 

Over 5 years 
£m 

(2,075.5) 
(71.3) 
– 
(604.1) 
421.1 

(2,329.8) 

Within 1 year
£m 

1–2 years
£m 

2–5 years 
£m 

Over 5 years 
£m 

–
(0.3)
(0.3)

–
–
–

– 
– 
– 

– 
– 
– 

2012 

Total
£m 

(4,721.7)
(90.3)
(23.0)
(1,035.9)
508.1

(5,362.8)

2011 

Total
£m 

(4,619.1)
(93.9)
(22.7)
(1,292.9)
697.9

(5,330.7)

2012 

Total
£m 

–
(0.3)
(0.3)

Group 

Borrowings (including interest) 
Finance lease obligations  
Other financial liabilities  
Derivative payments 
Derivative receipts 

Group 

Borrowings (including interest) 
Finance lease obligations  
Other financial liabilities 
Derivative payments 
Derivative receipts 

Company 

Borrowings (including interest) 
Other financial liabilities 

122

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
35 Financial risk management (continued) 

Company 

Borrowings (including interest) 
Other financial liabilities 

Credit risk 

Within 1 year
£m 

1–2 years
£m 

2–5 years 
£m 

Over 5 years
£m 

(1.3)
(0.5)
(1.8)

(1.3)
–
(1.3)

(48.8) 
– 
(48.8) 

–
–
–

2011 

Total
£m 

(51.4)
(0.5)
(51.9)

Credit risk is the risk of financial loss if a tenant or counterparty fails to meet an obligation under a contract. Credit risk arises primarily from 
trade receivables relating to tenants but also from the Group’s holdings of assets with counterparties such as cash deposits, loans and derivative 
instruments. 

Credit risk associated with trade receivables is actively managed; tenants are managed individually by asset managers, who continuously monitor 
and work with tenants, aiming wherever possible to identify and address risks prior to default. 

Prospective tenants are assessed via a review process, including obtaining credit ratings and reviewing financial information, which is conducted 
internally. As a result deposits or guarantees may be obtained. The amount of deposits held as collateral at 31 December 2012 is £2.7 million 
(2011 – £3.1 million). 

Due to the nature of tenants being managed individually by asset managers, it is Group policy to calculate any impairment of receivables specifically 
on each contract. 

The ageing analysis of trade receivables is as follows: 

Up to three months 
Three to six months 

Trade receivables 

Group
2012
£m 

15.9
0.9

16.8

Group
2011
£m 

17.8
1.4

19.2

At 31 December 2012 trade receivables are shown net of provisions totalling £6.8 million (2011 – £4.8 million). 

The credit risk relating to cash, deposits and derivative financial instruments is actively managed by the Group’s treasury department. Relationships 
are maintained with a number of tier one institutional counterparties, ensuring compliance with Group policy relating to limits on the credit ratings 
of counterparties (between BBB+ and AAA). 

Excessive credit risk concentration is avoided through adhering to authorised limits for all counterparties. 

Counterparty 

Counterparty #1 
Counterparty #2 
Counterparty #3 
Counterparty #4 
Counterparty #5 

Sum of five largest exposures 
Sum of cash deposits and derivative financial instrument assets 

Five largest exposures as a percentage of total amount at risk 

Credit rating 

Authorised
limit 

AAA 
AA– 
A 
A– 
A 

150
100
100
15
100

Group
Exposure
31 December 
2012
£m 

70.0
63.1
55.0
11.0
7.0

206.1
210.0

98%

123

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
Notes to the accounts  
continued 

35 Financial risk management (continued) 
Classification of financial assets and liabilities  

The tables below set out the Group’s accounting classification of each class of financial assets and liabilities, and their fair values at 31 December 
2012 and 31 December 2011. 

The fair values of quoted borrowings are based on the ask price. The fair values of derivative financial instruments are determined from observable 
market prices or estimated using appropriate yield curves at 31 December each year by discounting the future contractual cash flows to the net 
present values. 

Carrying
value
£m 

21.9
21.9

41.6
188.1

229.7

148.8
148.8

(514.9)
(514.9)

(94.5)
(3,845.8)
(3,940.3)

Carrying
value
£m 

22.7

22.7

42.8
90.7

133.5

171.2

171.2

(563.2)
(563.2)

(128.7)
(3,611.5)

(3,740.2)

Fair 
value 
£m 

21.9 
21.9 

41.6 
188.1 

229.7 

148.8 
148.8 

(514.9) 
(514.9) 

(94.5) 
(3,848.3) 
(3,942.8) 

Fair 
value 
£m 

22.7 

22.7 

42.8 
90.7 

133.5 

171.2 

171.2 

(563.2) 
(563.2) 

(128.7) 
(3,470.5) 

(3,599.2) 

2012 

Profit to
other 
comprehensive 
income
£m 

Profit to 
 income  
statement 
£m 

– 
– 

– 
– 

– 

1.4 
1.4 

41.4 
41.4 

– 
– 
– 

–
–

–
–

–

31.4
31.4

–
–

–
–
–

2011 

Loss to
other 
comprehensive 
income
£m 

Loss to 
 income  
statement 
£m 

– 

– 

– 
– 

– 

(8.7) 

(8.7) 

(193.4) 
(193.4) 

– 
– 

– 

–

–

–
–

–

(8.6)

(8.6)

–
–

–
–

–

Derivative financial instrument assets 
Total held for trading assets 

Trade and other receivables 
Cash and cash equivalents 

Total cash and receivables 

Other investments 
Total available-for-sale investments 

Derivative financial instrument liabilities 
Total held for trading liabilities 

Trade and other payables 
Borrowings 
Total loans and payables 

Derivative financial instrument assets 

Total held for trading assets 

Trade and other receivables 
Cash and cash equivalents 

Total cash and receivables 

Other investments 

Total available-for-sale investments 

Derivative financial instrument liabilities 
Total held for trading liabilities 

Trade and other payables 
Borrowings 

Total loans and payables 

124

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
35 Financial risk management (continued) 
The table below presents the Group’s financial assets and liabilities recognised at fair value. 

Assets 
Derivative financial instruments: 
– Fair value through profit or loss 
Available for sale investments 

Total assets 

Liabilities 
Convertible bonds 
– Designated as at fair value through profit or loss 
Derivative financial instruments: 
– Fair value through profit or loss 

Total liabilities 

Assets 
Derivative financial instruments: 
– Fair value through profit or loss 
– Derivatives used for hedging 
Available for sale investments 

Total assets 

Liabilities 
Derivative financial instruments: 
– Fair value through profit or loss 
– Derivatives used for hedging 

Total liabilities 

Fair value hierarchy 

Level 1
£m 

Level 2 
£m 

Level 3
£m 

–
1.9

1.9

311.0

–

311.0

21.9 
146.9 

168.8 

– 

514.9 

514.9 

–
–

–

–

–

–

Level 1
£m 

Level 2 
£m 

Level 3
£m 

–
–
44.4

44.4

–
–

–

22.7 
– 
126.8 

149.5 

(551.6) 
(11.6) 

(563.2) 

–
–
–

–

–
–

–

2012 

Total 
£m 

21.9
148.8

170.7

311.0

514.9

825.9

2011 

Total 
£m 

22.7
–
171.2

193.9

(551.6)
(11.6)

(563.2)

Level 1: Valuation based on quoted market prices traded in active markets. 

Level 2: Valuation techniques are used, maximising the use of observable market data, either directly from market prices or derived from 
market prices. 

Level 3: Where one or more inputs to valuation are not based on observable market data. Valuations at this level are more subjective and therefore 
more closely managed, including sensitivity analysis of inputs to valuation models. Such testing has not indicated that any material difference would 
arise due to a change in input variables. 

125

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

35 Financial risk management (continued) 
The table below presents a reconciliation of level 3 fair value measurements for the year: 

At 1 January 2011 
Unrealised gains 
Reclassified to intercompany 

At 31 December 2011 

At 31 December 2012 

Capital structure 

Debt
securities
£m 

5.9
0.4
(6.3)

–

–

The Group seeks to enhance shareholder value both by investing in the business so as to improve the return on investment and by managing the 
capital structure. The capital of the Group consists of equity, debt and hybrid financial instruments. The Group aims to access both debt and equity 
capital markets with maximum efficiency and flexibility.  

The key ratios used to monitor the capital structure of the Group are the debt to assets ratio and interest cover. The Group’s stated medium to long-
term preference is for the debt to assets ratio to be within the 40–50 per cent range and interest cover to be greater than 1.60x. At 31 December 
2012 the debt to asset ratio remains within the preferred range and the interest cover ratio continues to be above the preferred level. 

Debt to assets ratio 

Market value of investment and development property 
Net external debt 

Interest cover 

Interest payable 
Interest receivable 
Interest on convertible bonds recognised directly in equity 

Underlying operating profit 
Remove trading property related items 

Group 
2012 
£m 

7,073.1 
(3,504.2) 
49.5% 

Group  
2012 
£m 

(197.3) 
0.2 
(5.8) 

(202.9) 

342.2 
– 
342.2 

1.69x 

Group
2011
£m 

6,960.2
(3,374.2)
48.5%

Group
2011
£m 

(198.9)
0.8
(5.3)

(203.4)

347.7
0.5
348.2

1.71x

126

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
36 Deferred tax provision 

Under IAS 12 Income Taxes, provision is made for the deferred tax assets and liabilities associated with the revaluation of assets and liabilities 
at the corporate tax rate expected to apply to the Group at the time the temporary differences are expected to reverse. For those UK assets 
and liabilities benefitting from REIT exemption, the relevant tax rate will be 0 per cent (2011 – 0 per cent), for other UK assets and liabilities the 
relevant rate is 23 per cent (2011 – 25 per cent) and for other assets and liabilities the relevant tax rate will be the prevailing corporate tax rate 
in the relevant country. 

Movements in the provision for deferred tax:  

Provided deferred tax provision/(asset): 
At 1 January 2011 
Recognised in the income statement 
Recognised in other comprehensive income  
At 31 December 2011 
Recognised in the income statement 
Recognised in other comprehensive income  

At 31 December 2012 

Unrecognised deferred tax asset: 
At 1 January 2012 
Income statement items 

At 31 December 2012 

Other
investments
£m 

Derivative 
financial  
instruments 
£m 

Other
temporary
differences
£m 

–
7.6
(2.6)
5.0
(1.9)
5.6

8.7

–
–

–

(4.2) 
(4.1) 
0.3 
(8.0) 
(3.2) 
– 

(11.2) 

(39.1) 
2.0 

(37.1) 

4.2
(1.2)
–
3.0
(0.5)
–

2.5

(23.1)
(13.5)

(36.6)

Total
£m 

–
2.3
(2.3)
–
(5.6)
5.6

–

(62.2)
(11.5)

(73.7)

In accordance with the requirements of IAS 12 Income Taxes, the deferred tax asset has not been recognised in the Group financial statements due to 
uncertainty over the level of profits that will be available in the non-REIT elements of the Group in future periods. 

37 Other provisions 

At 1 January  
Utilised during the year 

At 31 December 

38 Share capital 

Issued and fully paid 
At 31 December 2011 – 860,347,169 ordinary shares of 50p each 
Shares issued 

At 31 December 2012 – 868,473,001 ordinary shares of 50p each 

Group
2012
£m 

1.2
(1.2)
–

Group 
2011 
£m 

1.2 
– 
1.2 

Company
2012
£m 

Company
2011
£m 

–
–
–

–
–
–

£m 

430.2
4.0

434.2

During the year the Company issued a total of 67,468 ordinary shares in connection with the exercise of options by former employees under the Intu 
Properties plc Approved Share Option Scheme and the Intu Properties plc Unapproved Share Option Scheme. 

Additionally, in connection with joint ownership elections by participants under the Company’s Joint Share Ownership Plan (‘JSOP’) a total of 
4,790,134 ordinary shares were issued during the year to the Trustee of the Employee Share Ownership Plan (‘ESOP’). 

On 20 November 2012 the Company issued 3,268,230 new ordinary shares to shareholders who elected to receive their 2012 interim dividend 
in shares under the Scrip Dividend Scheme. The value of the Scrip Shares was calculated in accordance with the terms of the Scrip Dividend 
Scheme, being the average middle market quotations for each day between 28 September to 4 October 2012 inclusive less the gross amount 
of dividend payable. 

Full details of the rights and obligations attaching to the ordinary shares are contained in the Company’s Articles of Association. These rights include 
an entitlement to receive the Company’s report and financial statements, to attend and speak at General Meetings of the Company, to appoint 
proxies and to exercise voting rights. Holders of ordinary shares may also receive dividends and may receive a share of the Company’s assets on the 
Company’s liquidation. There are no restrictions on the transfer of the ordinary shares. 

At 27 February 2013, the Company had an unexpired authority to repurchase shares up to a maximum of 86,034,716 shares with a nominal value of 
£43.0 million, and the Directors have an unexpired authority to allot up to a maximum of 214,921,400 shares with a nominal value of £107.5 million. 

Included within the issued share capital as at 31 December 2012 are 11,351,172 ordinary shares (2011 – 6,840,963) held by the Trustee of the ESOP 
which is operated by the Company (note 40). The nominal value of these shares at 31 December 2012 is £5.7 million (2011 – £3.4 million). 

127

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
Notes to the accounts  
continued 

39 Other reserves 

Group 

At 1 January 2011 
Revaluation of other investments 
Recognised in impairment of other investments 
Recognised in gain on disposal of subsidiaries 
Exchange differences 
Tax relating to components of other comprehensive income 
Realisation of merger reserve 
At 31 December 2011 
Revaluation of other investments 
Recognised in sale of other investments 
Exchange differences 
Tax relating to components of other comprehensive income 

At 31 December 2012 

Company 

At 1 January 2011 
Realisation of merger reserve 
At 31 December 2011 

At 31 December 2012 

Capital
redemption
£m 

Translation 
reserve 
£m 

61.4
–
–
–
–
–
–
61.4
–
–
–
–

61.4

12.7 
– 
– 
– 
(5.5) 
– 
– 
7.2 
– 
– 
(7.4) 
– 

(0.2) 

Capital 
redemption 
£m 

61.4 
– 
61.4 

61.4 

Other 
£m 

452.4 
(17.3) 
8.7 
(10.9) 
– 
2.3 
(185.1) 
250.1 
28.7 
2.7 
– 
(6.0) 

275.5 

Other 
£m 

185.1 
(185.1) 
– 

– 

Total
£m 

526.5
(17.3)
8.7
(10.9)
(5.5)
2.3
(185.1)
318.7
28.7
2.7
(7.4)
(6.0)

336.7

Total
£m 

246.5
(185.1)
61.4

61.4

During 2011 the merger reserve, created as part of the November 2010 capital raise associated with the acquisition of The Trafford Centre, was 
realised and transferred to retained earnings. 

40 Treasury shares and Employee Share Ownership Plan (‘ESOP’) 

The cost of shares in Intu Properties plc held either as treasury shares or by the Trustee of the Employee Share Ownership Plan (‘ESOP’) operated by 
the Company is accounted for as a deduction from equity. 

The purpose of the ESOP is to acquire and hold shares which will be transferred to employees in the future under the Group’s employee incentive 
arrangements as described in note 49 and the Director’s remuneration report on pages 74 to 88, including joint ownership of shares in its role 
as Trustee of the Joint Share Ownership Plan. Dividends of £1.72 million (2011 – £0.79 million) in respect of these shares have been waived 
by agreement. 

At 1 January 
Acquisition of treasury shares 
Disposal of treasury shares 

At 31 December  

Group and Company 

2012
Shares
million 

6.8
4.8
(0.2)

11.4

2012 
£m 

29.5 
15.6 
(1.2) 

43.9 

2011 
Shares 
million 

6.9 
0.1 
(0.2) 

6.8 

2011
£m 

29.9
0.2
(0.6)

29.5

128

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
41 Business combinations 
Acquisitions during 2012 

On 19 December 2012 the Group acquired 100 per cent of the share capital of StyleMeTV Limited for total consideration with a fair value of 
£3.4 million including £3.2 million of contingent consideration which is subject to the satisfaction of various performance conditions. The fair value 
of net liabilities acquired was £0.6 million resulting in goodwill of £4.0 million being recognised on the acquisition. 

On 24 December 2012 the Group acquired 100 per cent of the share capital of Capital & Regional (Braehead) Limited (renamed Intu Braehead 
Limited), which holds a 50 per cent interest in the Xscape Braehead Partnership for consideration of £4.0 million. As a result of this transaction, 
the Group’s interest in the Xscape Braehead Partnership is now 100 per cent. Assets with a fair value of £30.3 million and liabilities with a fair value 
of £24.0 million were acquired with the difference from the consideration being included in the income statement. 

Acquisitions during 2011 

Acquisition of The Trafford Centre 

On 28 January 2011 the Group acquired 100 per cent of the share capital of Tokenhouse Holdings Limited (renamed CSC Trafford Centre Group 
Limited) for consideration consisting of 155.0 million ordinary shares in the Company and £127.6 million, 3.75 per cent perpetual subordinated 
convertible bonds (the ‘convertible bonds’). As a condition of the acquisition the Company also issued to the Peel Group 12,316,817 ordinary shares 
for £3.55 each and convertible bonds with a nominal value of £26.7 million convertible into 6,679,250 ordinary shares, for a subscription amount 
of £23.7 million and an implied issue price of the underlying shares of £3.55 each. Total exceptional administration expenses associated with the 
acquisition and integration were £21.6 million. 

Through its subsidiaries CSC Trafford Centre Group Limited owns and operates The Trafford Centre in Manchester.  

The fair value of the consideration paid was assessed as £702.7 million, consisting of £582.8 million in respect of the ordinary shares and 
£119.9 million in respect of the convertible bonds. The fair value was assessed using the Intu Properties plc opening share price on 28 January 2011 
of £3.76, being the share price at the point the acquisition took place. 

The fair value of assets and liabilities acquired is set out in the table below. 

Assets 
Investment and development property 
Plant and equipment 
Cash and cash equivalents (including restricted cash of £3.6 million) 
Trade and other receivables 

Total assets 
Liabilities 
Borrowings 
Trade and other payables 
Derivative financial instruments 

Total liabilities 
Net assets 

Fair value of consideration paid 
Gain on acquisition of subsidiaries 

Book value 
£m 

Fair value 
adjustment
£m 

1,653.6 
0.4 
41.2 
18.8 

1,714.0 

(833.3) 
(90.1) 
(17.5) 

(940.9) 
773.1 

(3.6)
–
–
(12.9)

(16.5)

(16.6)
15.6
–

(1.0)
(17.5)

Fair value
£m 

1,650.0
0.4
41.2
5.9

1,697.5

(849.9)
(74.5)
(17.5)

(941.9)
755.6

702.7
52.9

The book values disclosed are under IFRS and after allowing for the impact of joining the REIT regime. The trade and other liabilities book value 
includes the REIT entry charge of £33.0 million. 

The fair value of the assets and liabilities acquired exceeds the fair value of the consideration and as a result a gain of £52.9 million is recognised in 
the income statement on acquisition. This gain reflects the Intu share price at the date of the acquisition of £3.76 which, in accordance with IFRS 3 
Business Combinations, is required to be used to assess the fair value of the consideration for acquisition accounting purposes. The acquisition was 
however agreed based on an issue price of the Intu ordinary shares of £4.00. The difference between the agreed issue price of £4.00 and the share 
price at the date the acquisition was completed of £3.76 is the principal reason for recording an accounting gain on the acquisition.  

Amounts disclosed have been adjusted from those reported in the Group’s interim financial statements to reflect the finalisation of the review of the 
acquired net assets and liabilities. This has resulted in an increase of £1.4 million in the trade and other payables recognised with a resulting reduction 
in the gain in the income statement. 

During the year ended 31 December 2011 the acquired companies contributed £80.5 million to the revenue of the Group and £25.4 million to 
the profit for the year ended 31 December 2011. The acquisition of The Trafford Centre contributed £29.6 million to the underlying earnings of 
the Group for the year ended 31 December 2011 including the deduction of £5.3 million in relation to interest on the convertible bonds which is 
deducted directly in equity. Had the acquisition taken place at 1 January 2011 the revenue of the Group for the year ended 31 December 2011 
would have been £524.1 million and the profit for the year ended 31 December 2011 would have been £36.3 million. 

129

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
Notes to the accounts  
continued 

41 Business combinations (continued) 
Acquisition of Broadmarsh 

On 1 December 2011 the Group acquired a 100 per cent interest in The Broadmarsh Retail Limited Partnership for an initial cash consideration of 
£72.8 million. The final consideration was subsequently adjusted for the agreed net assets value of the business at 1 December 2011 which is 
expected to result in a reduction to the purchase price of £2.1 million. The fair value of the consideration was therefore assessed as £70.7 million.  

The Broadmarsh Retail Limited Partnership owns and manages the Broadmarsh shopping centre, Nottingham. 

The fair value of assets and liabilities acquired is set out in the table below. 

Investment and development property 
Trade and other receivables 
Trade and other payables 

Net assets 
Fair value of consideration paid 

Goodwill recognised on acquisition 

Book value 
£m 

Fair value 
adjustment 
£m 

Fair value
£m 

63.9 
1.6 
(4.1) 

61.4 

1.1 
(1.1) 
– 

– 

65.0
0.5
(4.1)

61.4
70.7

9.3

The fair value of the consideration exceeds the fair value of the assets and liabilities acquired and as a result goodwill of £9.3 million was recognised 
in the balance sheet on acquisition. This goodwill represents future cash flows which the Group expects to receive as a result of the acquisition.  

During the year ended 31 December 2011 the acquired business contributed £0.3 million to the revenue of the Group and £0.1 million to the profit 
for the year ended 31 December 2011. Had the acquisition taken place at 1 January 2011 the revenue of the Group for the year ended 31 December 
2011 would have been £521.2 million and the profit for the year would have been £53.0 million.  

In 2012 the fair value of consideration was reassessed, reducing goodwill to £8.8 million. Due to a reduction in the 2012 year end property valuation, 
the remaining goodwill has been impaired. 

42 Sale of subsidiaries 
Disposal of C&C US in 2011 

In 2010 the Group entered into an agreement with Equity One, pursuant to which Equity One agreed to acquire the Group’s interests in its US 
subsidiaries (‘C&C US’), through a venture with Intu. The transaction was completed on 4 January 2011. Consideration consisted of 11.35 million 
units in the venture and 4.05 million shares in Equity One common stock. Based on the Equity One share price on 4 January of $18.15 and an 
exchange rate on that day of 1.56, the consideration had a fair value of £179.3 million at the date of the transaction and the net assets exchanged 
had a book value of £147.3 million including a deferred tax liability on investment property of £47.7 million. After taking into account costs of the 
transaction of £2.5 million, and the transfer of related hedging and foreign currency balances from equity of £10.9 million, a profit of £40.4 million 
was recognised in the income statement as summarised in the table below. 

Fair value of consideration received 
Book value of net assets 
Costs of the transactions 
Cumulative foreign currency and hedging balances transferred from reserves 

Gain on sale of subsidiaries 

43 Capital commitments 

At 31 December 2012, the Board had approved £50.0 million (2011 – £34.6 million) of future expenditure for the purchase, construction, 
development and enhancement of investment property. Of this, £20 million (2011 – £7.7 million) is contractually committed. The majority 
of this is expected to be spent in 2013. 

The Group’s share of joint venture commitments approved by the Board included above at 31 December 2012 was £6.0 million (2011 – 
£13.3 million). Of this none (2011 – none) is contractually committed. 

44 Contingent liabilities 

As at 31 December 2012, the Group has no material contingent liabilities other than those arising in the normal course of business. 

£m 

179.3
(147.3)
(2.5)
10.9

40.4

130

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45 Cash generated from operations 

  Notes 

Continuing operations 
Profit/(loss) before tax 
Remove: 
Revaluation and sale of investment and development property 
Gain on acquisition of subsidiaries 
Gain on sale of subsidiaries 
Sale and impairment of other investments 
Impairment of goodwill 
Distribution of shares received from Provogue 
Depreciation 
Share-based payments 
Lease incentives and letting costs 
(Reversal of impairment)/impairment of investment in Group companies 
Finance costs 
Finance income 
Other finance costs 
Change in fair value of financial instruments 
Changes in working capital: 
Change in trading property 
Change in trade and other receivables 
Change in trade and other payables 

Cash generated from operations 

7
41
42

24

12

13
14

Group
2012
£m 

152.6

(40.9)
(2.3)
–
(1.4)
8.8
(10.2)
1.5
3.8
(3.2)
–
197.3
(0.2)
67.9
(30.5)

5.4
(0.7)
(8.7)

339.2

Group 
2011 
£m 

27.2 

(63.0) 
(52.9) 
(40.4) 
8.7 
– 
– 
1.4 
3.6 
(4.0) 
– 
198.9 
(0.8) 
55.7 
193.4 

6.5 
(11.6) 
0.3 

323.0 

Company
2012
£m 

Company
2011
£m 

24.3

(43.9)

–
–
–
–
–
–
1.4
3.8
–
(57.6)
6.0
(6.6)
8.7
11.0

–
(111.0)
300.7

180.7

–
–
–
–
–
–
1.2
3.6
–
14.1
7.2
–
5.5
–

–
(0.9)
46.3

33.1

131

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
Notes to the accounts  
continued 

46 Principal subsidiary undertakings 

Company and principal activity 
• Barton Square Limited1 (property) 
• Capital Shopping Centres PLC1 (property) and its principal subsidiary undertakings: 

Belside Limited (property) (Jersey) 
Braehead Glasgow Limited (property) 

Braehead Park Investments Limited (property) 
Braehead Park Estates Limited (property) 
Broadmarsh Retail General Partner Limited1 acting as General Partner of The Broadmarsh 
Retail Limited Partnership 
Chapelfield GP Limited acting as General Partner of The Chapelfield 
Partnership (property) 
CSC Enterprises Limited (commercial promotion) 
CSC Properties Investments Limited (property) 
Curley Limited (property) (Jersey) 
Intu Watford Limited (formerly CSC Harlequin Limited) (property) 
Intu Lakeside Limited (formerly CSC Lakeside Limited) (property) 
Intu Bromley Limited (formerly CSC Bromley Limited) (property) 
Intu Uxbridge Limited (formerly CSC Uxbridge (Jersey) Limited) (property) (Jersey) 

  Metrocentre (GP) Limited acting as General Partner of The Metrocentre  

Partnership (property) 
VCP (GP) Limited acting as General Partner of The Victoria Centre Partnership 

• CSC Ventures Limited1 (holding company) 
• Intu Debenture plc1 (formerly Capital Shopping Centres Debenture PLC) (finance) and its 

principal subsidiary undertakings: 

Intu Eldon Square Limited (formerly CSC (Eldon Square) Limited) (property) 
Potteries (GP) Limited acting as General Partner of The Potteries  
Shopping Centre Limited Partnership (property) 
Steventon Limited (property) (Jersey) 
  WRP Management Limited (property) 
• Intu (Jersey) Limited (formerly Capital Shopping Centres (Jersey) Limited) (finance) (Jersey) 
• Liberty International Group Treasury Limited1 (treasury management) 
• Liberty International Holdings Limited1 (holding company) 
• Nailsfield Limited (holding company) (Mauritius) 
• The Trafford Centre Finance Limited1 (finance) (Cayman Islands) 
• The Trafford Centre Limited1 (property) 

Class of share capital  % held 

Ordinary shares of £1 each
Ordinary shares of 50p each
Ordinary shares of £1 each
‘A’ Ordinary shares of £1 each
‘B’ Ordinary shares of 1.3 Euros each
Ordinary shares of £1 each
Ordinary shares of £1 each
‘A’ Ordinary shares of £1 each
‘B’ Ordinary shares of £1 each

Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each

Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each

Ordinary shares of £1 each
Ordinary shares of £1 each

Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
Ordinary shares of £100 each
Ordinary shares of £1 each
Ordinary shares of 50p each
Ordinary shares of US$1 each
Ordinary shares of £1 each
Ordinary shares of £1 each
‘A’ Preference shares of 17p each
‘B’ Preference shares of £1 each

100
100 
100 
100 
100 
100 
100 
100
100

100 
100 
100 
100 
100 
100 
100 
100 

1002
100
100

100 
100 

100 
100 
100 
100
100 
100
100 
100
100
100
100

1  Shareholdings in these companies are held by intermediate subsidiary undertakings except for Capital Shopping Centres PLC where 82.5 per cent is 
held by Intu Properties plc and 17.5 per cent is held by Liberty International Financial Services Limited, and Liberty International Holdings Limited 
where 40.2 per cent is held by Intu Properties plc, 31.1 per cent is held by Conduit Insurance Holdings Limited and 28.7 per cent is held by TAI 
Investments Limited. 

2  By virtue of their 40 per cent interest in The Metrocentre Partnership, GIC Real Estate is entitled to appoint 40 per cent of the Directors of Metrocentre 
(GP) Limited. The non-controlling interest balance of £29.2 million shown in the balance sheet as at 31 December 2011 (2011 – £23.5 million) relates to 
GIC Real Estate’s interest and is calculated in accordance with IAS 27 Consolidated and Separate Financial Statements. 

The companies listed above are those subsidiary undertakings whose results or financial position, in the opinion of the Directors, principally 
affected the figures in the Company’s consolidated financial statements. A full list of related undertakings will be annexed to the Company’s next 
annual return. 

Companies are incorporated and registered in England and Wales unless otherwise stated. All subsidiary undertakings have been included 
in the consolidated results. 

132

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
47 Related party transactions 
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation for the Group.  

Significant transactions between the Company and its subsidiaries are shown below: 

Interest paid 
Interest received 
Dividend received 
Redemption of preference shares 

2012 
£m 

(1.8)
6.6
–
–

2011 
£m 

(12.7)
7.7
14.5
(220.9)

The Company has provided Intu (Jersey) Limited (formerly Capital Shopping Centres (Jersey) Limited) a guarantee over obligations in relation to the 
2.5 per cent convertible bonds. Further details are provided in note 33. 

Significant balances outstanding between the Company and its subsidiaries are shown below: 

Amounts owed by subsidiary undertakings 
Amounts owed to subsidiary undertakings 

Key management compensation is analysed below:1 

Salaries and short-term employee benefits 
Pensions and other post-employment benefits 
Share-based payments 
Termination benefits 

2012 
£m 

678.3
(329.7)

2012 
£m 

4.6
0.4
2.2
–

7.2

2011 
£m 

562.8
(27.9)

2011 
£m 

4.6
0.3
1.8
0.9

7.6

1  Key management comprises the Directors of Intu Properties plc and those employees who have been designated as persons discharging managerial 

responsibility. 

As John Whittaker, Deputy Chairman and Non-Executive Director of Intu, is the Chairman of the Peel Group, members of the Peel Group are 
considered to be related parties. Total transactions between the Group and members of the Peel Group are shown below: 

Income 
Expenditure 

2012 
£m 

2.4
(0.6)

2011
£m 

2.4
(0.6)

Income predominantly relates to leases of office space and a contract to provide advertising services. Expenditure predominantly relates to costs 
incurred under the transitional services agreement and the supply of utilities. All contracts are on an arms length basis at commercial rates. 

Balances outstanding between the Group and members of the Peel Group as at 31 December 2012 are shown below: 

Amounts owed by members of the Peel Group 
Amounts owed to members of the Peel Group 

2012 
£m 

–
(0.1)

2011
£m 

0.1
(0.1)

Under the terms of the Group’s acquisition of the Trafford Centre from the Peel Group, the Peel Group have provided a guarantee in respect 
of Section 106 liabilities at Barton Square which as at 31 December 2012 totalled £11.0 million (2011 – £10.6 million). 

During the year the Group acquired from the Peel Group a 30.96 acre site known as King George V Docks (West) adjacent to Intu’s shopping centre 
at Braehead for £4.7 million. The Group also acquired for €2.5 million, alongside a refundable deposit of €7.5 million, a three year option to purchase 
two parcels of land in the province of Malaga, Spain. 

133

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

48 Directors’ emoluments 

The details of individual Directors’ remuneration and pension benefits as set out in the tables contained in the Directors’ remuneration report 
on pages 74 to 88 form part of these financial statements. 

49 Share-based payment 

The Group operates a number of share-based payment arrangements providing employee benefits and incentives. All schemes are equity settled, 
and as such the expense recognised in the income statement is assessed based on the fair value of the equity instruments awarded as determined 
at their grant date. The expense is recognised on a straight-line basis over the vesting period based on Group estimates of the number of shares that 
are expected to vest. 

Share Option Schemes 

Options to subscribe for ordinary shares may be awarded under the Intu Properties plc Approved Share Option Scheme and the Intu Properties plc 
Unapproved Share Option Scheme. 

Exercise is subject to an earnings per share (‘EPS’) performance condition. The performance condition for options granted up to 2011 requires 
Intu Group ‘smoothed’ earnings to grow over a three year period commencing with the year of grant at a rate in excess of 5 per cent per annum 
compound. ‘smoothed’ earnings growth means the percentage increase in underlying earnings per share, adjusted by (a) excluding exceptional 
and valuation items and (b) limiting trading or non-recurring items to 10 per cent of profit before tax. For the award made in 2009 exceptionally, 
the base figure for comparison purposes is the ‘smoothed’ earnings achieved in 2009 for comparison with the three year period commencing 
with 2010. 

Options granted to members of the Executive Committee in 2012 are subject to a sliding scale performance condition based on EPS growth of 
between 4–6 per cent per annum over a three year period. Options granted to staff who are not members of the Executive Committee 2012 are 
not subject to a performance condition. 

Except in the case of a ‘good’ leaver, options may not be exercised within three years of grant and before satisfaction or waiver of any applicable 
performance condition, and are forfeited if the employee leaves the Group before the options become capable of exercise. The options 
automatically lapse if not exercised within 10 years of the date of grant. 

In 2012, individuals who received awards of unapproved options in 2011 and 2012 were given the option to exchange their awards for jointly owned 
shares under the JSOP. As required by IFRS 2 Share-based Payment, the fair value of the award is measured immediately before the modification 
and immediately after and any increase in fair value must be recognised as an expense through the income statement over the performance period. 
Under this test an additional £0.1 million will be charged over the remaining vesting period. 

Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 

Outstanding at 1 January 
Awarded during the year 
Forfeited during the year 
Transferred to JSOP 
Expired during the year 
Exercised during the year 

Outstanding at 31 December 

Exercisable at 31 December 

Number of options 

Weighted average 
exercise price (pence) 

Number of options 

Weighted average 
exercise price (pence) 

2012 

2011 

10,047,091
2,976,465
–
(4,788,154)
(675,892)
(1,357,474)

6,202,036

245,402

332
336
–
360
409
293

312

458

7,572,945 
3,135,000 
(282,923) 
– 
(20,588) 
(357,343) 

10,047,091 

2,197,749 

306
387
330
–
387
275

332

348

The weighted average share price at the date of exercise during the year was 328p (2011 – 396p). 

The number of options outstanding at 31 December 2012 includes a total of 4,252,205 (2011 – 5,531,170) which are subject to a capped gain. 
3,569,537 (2011 – 4,848,502) are subject to a capped price of £3.339 per share and 682,668 (2011 – 682,668) are subject to a capped price of 
£3.584 per share. If the market price of shares at the date of exercise exceeds the capped price, the maximum gain the holder of such options can 
realise is the difference between exercise price and the capped price per share. 

Share options outstanding at 31 December 2012 had exercise prices between 272p and 528p (2011 – between 272p and 528p) and a weighted 
average remaining contractual life of approximately seven years (2011 – eight years). More detail by exercise price ranges is shown below: 

Exercise price (pence) 

272 to 336 
387 to 528 

Exercise price (pence) 

272 to 313 
387 to 528 

134

Number of options 

5,562,392 
639,644 

2012 

Weighted 
average remaining 
contractual life 

7
6

2011 

Number of options 

6,526,816 
3,520,275 

Weighted 
average remaining 
contractual life 

8
8

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
49 Share-based payment (continued) 

The weighted average fair value of options granted during the year, determined using the Black-Scholes option pricing model, was £0.62 per option 
(2011 – £0.87). The significant inputs to the model for the majority of options awarded during the year were as follows: 

Share price and exercise price at grant date 
Expected option life in years 
Risk free rate 
Expected volatility 
Expected dividend yield 

2012 

£3.36
4 years
1.4%
33.8%
4.5%

2011 

£3.87
4 years
2.8%
35.5%
3.9%

Expected dividend yield is based on public pronouncements about future dividend levels. All other measures are based on historical data. 

Joint Share Ownership Plan 

Eligible employees may be invited to participate in the Joint Share Ownership Plan (‘JSOP’) which forms part of the Intu Properties plc Unapproved 
Share Option Scheme. Under the JSOP shares are held jointly by the employee and the Employee Share Ownership Plan Trustee with any increases 
in the share price and dividends paid on those shares being allocated between the joint owners in accordance with the terms of the scheme. 

Conditions for exercise (including satisfaction of the same performance condition), forfeiture and lapsing are as set out above for options generally. 

In 2012, individuals who received awards of unapproved options in 2011 and 2012 were given the option to exchange their awards for jointly owned 
shares under the JSOP. 

Bonus Share Scheme 

Under the Intu Group Bonus Scheme (the ‘Bonus Scheme’), deferred shares may be awarded as part of any bonus. 

Such awards comprise ‘Restricted’ shares and ‘Additional’ shares. Where awarded, Additional shares are equal to 50 per cent of the Restricted 
shares and SIP shares (see below) combined. The release of deferred share awards is not dependent on the achievement of any further performance 
conditions other than that participants remain employed by the Group for a specified time from the date of the award, typically two years in the case 
of Restricted shares and four years in the case of Additional shares. The fair value of Restricted shares granted during the year, determined using the 
Black-Scholes option pricing model, was £3.07 per share (2011 – £3.58 per share). The significant inputs to the model were as follows: 

Share price at grant date 
Expected option life in years 
Risk free rate 
Expected volatility 
Expected dividend yield 

Year of grant 

Outstanding at 1 January 
Awarded during the year 
Forfeited during the year 
Vested during the year 

Outstanding at 31 December 

2012 

£3.36
2 years
1.2%
22.9%
4.5%

Restricted 

–
526,097
(7,602)
(73,642)

444,853

2011 

£3.87
2 years
2.8%
35.5%
3.9%

2011 

Additional 

–
–
–
–

–

Restricted 

Additional 

2012 

444,853
578,073
(6,361)
(21,466)

995,099

– 
– 
– 
– 
– 

135

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
Notes to the accounts  
continued 

49 Share-based payment (continued) 
Share incentive plan (‘SIP’) 

The Company operates a SIP for all eligible employees, who may receive up to £3,000 worth of shares as part of their annual bonus arrangements. 
The SIP arrangements offer worthwhile tax advantages to employees and to the Company.  

The SIP Bonus shares can be released three years after the date of the award, provided the individual employee has remained in employment, but 
the shares must then be held in trust for a further two years in order to qualify for tax advantages. The fair value of shares granted during the year, 
determined using the Black-Scholes option pricing model, was £3.36 per share (2011 – £3.58 per share). The significant input to the model were 
as follows: 

Share price at grant date 
Expected option life in years 
Risk free rate 
Expected volatility 
Expected dividend yield 

2012 

£3.36 
4 years 
2.8% 
33.4% 
0.0% 

2011 

£3.87
4 years
2.8%
35.5%
0.0%

As part of the SIP arrangements, the Company also offers eligible employees the opportunity to participate in a ‘Partnership’ share scheme, 
under which employees can save up to £125 a month. The Group offers one free Matching share for every two Partnership shares purchased by 
the employee at the end of a twelve-month saving period. Matching shares are forfeited if the employee leaves the Group within three years of 
the date of award, and qualify for tax advantages if they are held in the SIP for five years. The fair value of Matching shares is determined by the 
market price at the grant date. 

The dividend payable in respect of the shares held in the SIP is used to purchase additional shares, known as Dividend Shares, which are also held in 
trust and allocated to individuals and are subject to the same conditions of release. 

Movements in SIP bonus shares granted are as follows: 

Outstanding at 1 January 
Awarded during the year 
Forfeited during the year 
Vested during the year1 
Outstanding at 31 December2 

1  May still be held in trust. 

2  Shares that remain within their three year holding period. 

50 Pensions 

2012 

68,854 
90,082 
(7,081) 
(3,920) 
147,935 

2011 

16,556
74,325
(4,738)
(17,289)
68,854

The Group operates for Trafford Centre employees a trustee-based money purchase scheme (The Trafford Centre Limited Retirements Benefits 
Scheme) and a stakeholder scheme. For all other employees the Group operates a defined contribution group pension plan (the ‘GPP’). Additionally 
the Group makes contributions to self-invested personal pension arrangements (‘sIPPs’) on behalf of an executive director. All contributions are 
invested in funds administered outside of the Group. 

The pension charge for the Group’s contributions to these arrangements is the actual amount paid which totalled £1.2 million for the year ended 
31 December 2012 (2011 – £1.1 million). 

51 Events after the reporting period 

There have been no events after the reporting period that require disclosure in these financial statements. 

136

Intu Properties plc 2012 Annual ReportAccounts continued 
 
52 Directors’ interests 
(a) In shares in the Company 

The number of ordinary shares of the Company in which the Directors were beneficially interested were: 

Chairman: 
D.P.H. Burgess 

Deputy Chairman: 
J. Whittaker* 

Executive: 
D.A. Fischel 
E.M.G. Roberts 

Non-Executive: 
J.G. Abel 
A. Anderson (appointed 27.02.13) 
R.M. Gordon 
I.J. Henderson (retired 25.04.12) 
A.J.M. Huntley  
Lady Patten  
R.O. Rowley 
N. Sachdev 
A.D. Strang  

2012 

2011 

29,266

29,266

174,131,209

172,731,549

556,010
30,000

549,322
30,000

122,221
–
5,436,526
12,601
12,000
10,000
1,260
–
–

122,221
–
5,436,526
12,601
12,000
10,000
1,260
–
–

*  Total beneficial interest includes shares held by subsidiaries of the Peel Group of which J Whittaker is the chairman. In addition, the 3.75 per cent 

convertible bonds issued on 28 January 2011, which are explained in detail in note 33, are held by the Peel Group and therefore constitute as an interest of 
J Whittaker. J Whittaker’s total interest in ordinary shares of the Company (including shares issuable on conversion of the 3.75 per cent convertible bonds) 
is therefore 212,710,459, representing 23.45 per cent of issued share capital following such conversion. During the year, interest on the 3.75 per cent 
convertible bonds, recognised directly in equity totalled £5.8 million (2011 – £5.3 million). 

Conditional awards of shares have previously been made to Executive Directors under the Company’s annual bonus scheme. 

The awards comprise ‘Restricted’ shares and ‘Additional’ shares, the latter equal to 50 per cent of the restricted and Share Incentive Plan shares 
combined. As noted in the Directors’ remuneration report contained in the Company’s 2010 Annual Report, all outstanding deferred bonus shares 
held by Directors and staff vested in March 2010. Executive Directors were required to retain the shares, net of shares sold to meet tax and PAYE 
deductions, which vested ahead of the normal vesting date.  

Awards to Executive Directors under the scheme since January 2011 are as follows: 

D.A. Fischel 

Award date 

03/03/2011 
05/03/2012 

387  03/03/2013
336  05/03/2014

Market price at 
award (pence) 

Original 
vesting date 

Market price at 
vesting (pence) 

E.M.G. Roberts 

03/03/2011 
05/03/2012 

387  03/03/2013
336  05/03/2014

Number of 
shares at 
31 December 
2011 

158,784
–

65,470
–

Number of 
shares lapsed 
during 2012 

Number of 
shares awarded 
during 2012 

Number of 
shares vested 
during 2012 

–
–

–
–

– 
153,795 

– 
113,170 

–
–

–
–

Number of 
shares at 
31 December 
2012 

158,784
153,795

65,470
113,170

–
–

–
–

Details of Restricted and Additional shares awarded in respect of the year ended 31 December 2012 are given in the Directors’ remuneration report 
on pages 74 to 88. 

137

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
Notes to the accounts  
continued 

52 Directors’ interests (continued) 

Awards may also be made under the Company’s Share Incentive Plan (‘SIP’). The SIP shares can be released three years after the date of the award 
provided the individual Director has remained in employment but the shares must be held in trust for a further two years in order to qualify for tax 
advantages. The dividend payable in respect of the shares held in trust is used to purchase additional shares, known as Dividend Shares, which are 
also held in trust.  

Current Directors: 
D.A. Fischel 
E.M.G. Roberts 

At 
31 December 
2011 

Removed 
from trust 

Lapsed 

1
Awarded

Partnership,  
matching and  
dividend  
shares 

At 
31 December 
20122

7,612
804

–
–

–
–

892 
892 

1,076 
792 

9,580
2,488

1  SIP shares awarded in respect of the year ended 31 December 2011 awarded in March 2012. Details of SIP shares awarded in respect of the year ended 

31 December 2012 are given in the Directors’ remuneration report on pages 74 to 88. 

(b) In share options in the Company 

Executive Directors interests in share options are given in the Directors’ remuneration report on pages 74 to 88. 

(c) Other disclosures 

No Director had any dealings in the shares of any Group company between 31 December 2012 and 27 February 2013, being a date less than 
one month prior to the date of the notice convening the Annual General Meeting. 

Other than as disclosed in these accounts, no Director of the Company had a material interest in any contract (other than service contracts), 
transaction or arrangement with any Group company during the year ended 31 December 2012. 

138

Intu Properties plc 2012 Annual ReportAccounts continued 
 
 
 
 
 
Other 
information

In this section

140  Investment and development property
142  Financial covenants
143  Underlying profit statement
144  EPRA performance measures
146  Financial record 2009–2012
147  Management structure and advisers
148  Glossary
150  Dividends
151  Shareholder information

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139

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
Other information

Investment and development property (unaudited) 

1. Property valuation data as at 31 December 2012  

As at 31 December 2012 
Trafford Centre 
Lakeside 
Metrocentre 
Braehead 
Manchester Arndale 
The Harlequin, Watford 
Victoria Centre, Nottingham 
St David’s, Cardiff 
Eldon Square, Newcastle 
Chapelfield, Norwich 
Cribbs Causeway 
The Chimes, Uxbridge 
The Potteries, Stoke-on-Trent 
The Glades, Bromley 
Other 

Total investment and development property 
As at 31 December 2011 

Market value
£m 

Net initial
yield (EPRA) 

‘Topped-up’ NIY 
(EPRA) 

Nominal 
equivalent yield 

Occupancy 

1,800.0
1,092.5
878.0
601.4
383.3
324.0
308.0
275.8
251.0
242.3
232.0
213.0
166.3
163.7
141.8

7,073.1
6,960.2

4.5%
5.0%
5.1%
4.9%
5.2%
5.4%
5.1%
5.2%
5.1%
5.9%
5.1%
5.7%
7.6%
5.8%

4.8% 
5.1% 
5.5% 
5.1% 
5.3% 
5.5% 
5.3% 
5.5% 
5.2% 
6.0% 
5.3% 
5.8% 
7.6% 
5.9% 

5.4% 
5.6% 
5.8% 
5.9% 
5.7% 
6.6% 
6.7% 
5.9% 
6.7% 
6.7% 
6.0% 
6.5% 
7.7% 
7.5% 

5.04%
5.12%

5.24% 
5.34% 

5.94% 
5.98% 

97%
97%
96%
95%
98%
92%
94%
97%
97%
98%
95%
100%
100%
93%

96%
97%

Passing rent 
ERV 
Weighted average unexpired lease term 

Please refer to the glossary for the definition of terms. 

2. Analysis of capital return in the year 

Like-for-like property 
Acquisitions 
Developments 

Total investment and development property 

31 December  
2012 
£m 

31 December 
2011
£m 

357.5 
456.0 
7.8 years 

358.4
455.7
7.5 years

Market value 

Revaluation surplus

2012
£m 

7,016.9
48.8
7.4
7,073.1

2011  
£m  

6,954.4 
– 
5.8 
6,960.2 

£m 

41.5 
(0.7) 
– 
40.8 

2012
% 

0.6
(1.3)
–
0.6

140

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
 
 
 
 
3. Additional property information as at 31 December 2012 

As at 31 December 2012 
Trafford Centre 
Lakeside 
Metrocentre 
Braehead 
Manchester Arndale 
The Harlequin, Watford 
Victoria Centre, Nottingham 
St David’s, Cardiff 
Eldon Square, Newcastle 
Chapelfield, Norwich 
Cribbs Causeway 
The Chimes, Uxbridge 
The Potteries, Stoke-on-Trent 
The Glades, Bromley 
Other 

Total investment and development property 
As at 31 December 2011 

Notes 

Ownership 

Note 

Form of 
ownershipI

Vacancy 
rate 
(EPRA)E 

Gross area 
million 
sq. ft.F 

Year
opened 

Acquisition 
dateG

100%
100%
90%
100%
48%
93%
100%
50%
60%
100%
33%
100%
100%
64%

FH
FH
LH
FH
LH
LH
FH
FH/LH
FH/LH
FH
FH/LH
FH
FH
LH

A

B

C

D

0.5% 
1.8% 
2.6% 
2.5% 
1.0% 
2.3% 
4.0% 
2.8% 
2.1% 
1.3% 
4.5% 
0.0% 
0.0% 
3.9% 

1.9% 
2.4% 

2.0 
1.4 
2.1 
1.1 
1.6 
0.7 
1.0 
1.4 
1.4 
0.5 
1.1 
0.4 
0.6 
0.5 
0.8 

16.6 
16.6 

1998
1990
1986
1999
1976
1992
1972
2009
1976
2005
1998
2001
1998
1991

2011
–
1995
–
2005
–
2002H
2006
–
–
2005
–
–
–

A 

Interest shown is that of the Metrocentre Partnership in the Metrocentre (90 per cent) and the Metro Retail Park (100 per cent). The Group has a 
60 per cent interest in the Metrocentre Partnership which is consolidated as a subsidiary of the Group. 

B  The Group’s interest is through a joint venture ownership of a 95 per cent interest in The Arndale, Manchester, and 90 per cent interest in New Cathedral 

Street, Manchester. 

C  The Group’s interest is through a joint venture ownership of a 66 per cent interest in The Mall at Cribbs Causeway and a 100 per cent interest in The Retail 

Park, Cribbs Causeway. 

D 

Includes the Group’s 67 per cent economic interest in Broadmarsh, Nottingham and the Group’s 100 per cent economic interest in Xscape, Braehead. 

E  As defined in the glossary. 

F  Area shown is not adjusted for the proportional ownership. 

G  The acquisition date is presented only where the centre was not built by the Group. 

H 

Intu held a 20 per cent stake in Victoria Centre, Nottingham prior to 2002 when it acquired the remaining 80 per cent to take its holding to 100 per cent. 

I  Form of ownership is shown as either freehold (‘FH’), leasehold (‘LH’) or freehold and leasehold (‘FH/LH’). 

141

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
Financial covenants (unaudited) 

Financial covenants on asset-specific debt excluding joint ventures 

Metrocentre 
Braehead 
The Harlequin, Watford 
Victoria Centre, Nottingham 
Chapelfield, Norwich 
The Chimes, Uxbridge 
The Glades, Bromley 
Lakeside 
Xscape 

The Trafford Centre 

Loan outstanding
at 31 January 
1
2013
£m 

Maturity 

LTV covenant 

Loan to  
31 December  
2012  
2
market value

Interest cover 
covenant 

Interest cover 
3
actual

2015
2015
2015
2016
2016
2016
2016
2017
2014

522.7
314.8
244.6
237.3
207.4
149.5
118.0
509.3
45.6

90%
N/A
N/A
90%
N/A
85%
85%
75%
90%

59% 
N/A 
N/A 
77% 
N/A 
70% 
72% 
47% 
80% 

120% 
120% 
120% 
120% 
120% 
120% 
120% 
140% 
120% 

138%
330%
260%
397%
159%
177%
197%
198%
250%

There are no financial covenants on the Trafford Centre debt. However a debt service cover ratio is assessed quarterly and where this falls below 
specified levels certain restrictions come into force. The loan to 31 December 2012 market value ratio is 43 per cent. 

Financial covenants on joint venture asset-specific debt 

St David’s, Cardiff 

Loan outstanding 
at 31 January
2013 
1
£m
93.44

Maturity 

2014

Loan to 
31 December 
2012  
2
market value

LTV covenant 

Interest cover  
covenant  

Interest cover 
3
actual

75%

34% 

180% 

275%

1  The loan values are the actual principal balances outstanding at 31 January 2013, which take into account any principal repayments made in January 2013. 

The balance sheet value of the loans includes any unamortised fees. Voluntary pre-payments of £15 million and £5 million were made in January 2013 for 
The Glades, Bromley and The Chimes, Uxbridge respectively. 

2  The Loan to 31 December 2012 market value provides an indication of the impact the 31 December 2012 property valuations could have on the LTV 

covenants. The actual timing and manner of testing LTV covenants varies and is loan specific. 

3  Based on latest certified figures, calculated in accordance with loan agreements, which have been submitted between 31 December 2012 and 31 January 

2013. The calculations are loan specific and include a variety of historic, forecast and, in certain instances, a combined historic and forecast basis. 

4  50 per cent of the debt is shown which is consistent with accounting treatment and the Group’s economic interest. 

Financial covenants on corporate facilities at 31 December 2012 

£375m facility, maturing in 2018* 
£300m due in 2018 2.5 per cent 
convertible bonds 

Net worth 
covenant 

Net worth
actual 

Interest cover
covenant 

Interest cover  
actual 

Borrowings/net  
worth covenant 

Borrowings/net 
worth actual 

£750m

£2,027.1m

120%

178% 

110% 

59%

n/a

n/a

n/a

n/a 

175% 

106%

• 

Tested on the Borrower Group which excludes, at the Group’s election, certain subsidiaries with asset-specific finance. The facility is secured on the 
Group’s investments in Manchester Arndale and Cribbs Causeway.  

Intu Debenture plc at 31 December 2012 

Maturity 

2027

Loan
£m 

231.4

Capital cover
 covenant 

Capital cover  
actual 

Interest cover  
covenant 

Interest cover 
actual 

150%

207% 

100% 

108%

The debenture is currently secured on the Group’s interests in The Potteries, Stoke-on-Trent, Eldon Square, Newcastle and Broadmarsh, Nottingham.  

Should the capital cover or interest cover test be breached Intu Debenture plc (formerly Capital Shopping Centres Debenture PLC) (the ‘issuer’) has 
three months from the date of delivery of the valuation or the latest certificate to the Trustees to make good any deficiencies. The issuer may 
withdraw property secured on the debenture by paying a sum of money or through the substitution of alternative property provided that the capital 
cover and interest cover tests are satisfied immediately following the substitution. 

142

Intu Properties plc 2012 Annual ReportOther information continued 
 
 
 
 
 
 
 
 
 
 
 
 
Underlying profit statement (unaudited) 
for the year ended 31 December 2012 

Net rental income 
Net other income 

Administration expenses  

Underlying operating profit 
Finance costs 
Finance income 
Other finance costs 
Underlying net finance costs 

Underlying profit before tax and associates 
Tax on underlying profit 
Remove amounts attributable to  
non-controlling interest 
Share of underlying profit/(loss) of associates 
Interest on convertible bonds deducted 
directly in equity 

Underlying earnings 

Underlying earnings per share (pence) 

Year ended 
31 December 
2012
£m 

Year ended 
31 December 
2011 
£m 

Six months 
ended 
31 December 
2012
£m 

Six months  
ended  
31 December  
2011  
£m 

Six months 
ended 
30 June 
2012
£m 

Six months 
ended 
30 June 
2011 
£m 

362.6
6.3

368.9
(26.7)
342.2

(197.3)
0.2
(6.9)
(204.0)

138.2
(0.8)

5.8
0.3

(5.8)
137.7

16.1p

364.0
7.8

371.8
(24.1)
347.7

(198.9)
0.8
(7.9)
(206.0)

141.7
(1.0)

3.3
(0.1)

(5.3)
138.6

16.5p

180.8
3.2

184.0
(13.4)
170.6

(98.8)
0.1
(3.4)
(102.1)

68.5
(0.3)

2.8
0.1

(2.9)
68.2

8.0p

186.1 
4.1 

190.2 
(12.3) 
177.9 

(100.8) 
0.2 
(3.9) 
(104.5) 

73.4 
(0.3) 

2.1 
– 

(2.9) 
72.3 

8.5p 

181.8
3.1

184.9
(13.3)
171.6

(98.5)
0.1
(3.5)
(101.9)

69.7
(0.5)

3.0
0.2

(2.9)
69.5

8.1p

177.9
3.7

181.6
(11.8)
169.8

(98.1)
0.6
(4.0)
(101.5)

68.3
(0.7)

1.2
(0.1)

(2.4)
66.3

8.0p

143

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
EPRA performance measures (unaudited)  

1. Summary 

The EPRA Best Practice Recommendations identify five key performance measures. The measures are deemed to be of importance for investors 
in property companies and aim to encourage more consistent and widespread disclosure. The Group is supportive of this initiative but continues 
to disclose additional measures throughout this report which it believes are more appropriate to the Group’s current circumstances. 

The EPRA measures as calculated for the Group are detailed below: 

EPRA Earnings 
– per share 
EPRA NAV 
– per share 
EPRA Triple Net Asset Value (‘NNNAV’) 
– per share 
EPRA Net Initial Yield 
EPRA ‘topped-up’ NIY 
EPRA Vacancy Rate 

2012 

2011 

£139.6m 
16.4p 
£3,515.4m 
392p 
£3,017.2m 
336p 
5.0% 
5.2% 
1.9% 

£133.4m
15.9p
£3,492.7m
391p
£3,101.4m
347p
5.1%
5.3%
2.4%

Details of the Group’s performance against the EPRA Best Practice Recommendations on Sustainability Reporting can be found in full in the 
2012 Corporate Responsibility Report and in part on page 55.  

2. EPRA earnings 

Basic earnings per share from continuing operations 
Remove: 
Revaluation and sale of investment and development 
property 
Share of associates revaluation and sale of investment 
and development property 
Sale and impairment of investments 
Impairment of goodwill 
Gain on acquisition of subsidiaries 
Gain on sale of subsidiaries 
Change in fair value of financial instruments 
Exceptional administration costs – acquisition related 
Exceptional finance charges – termination of derivative 
financial instrument 
Profits on sale and write down of trading property 
Tax on the above 
Non-controlling interest in respect of the above 

EPRA earnings per share 
Reconciliation to the Group’s measure of underlying 
earnings per share 
Remove: 
Exceptional items 
Other exceptional tax 
Distribution of shares received from Provogue 
Add: 
Profits on sale and write down of trading property 

Underlying earnings per share 

Earnings 
£m 

150.1

Shares 
million 

853.8

2012 

Pence per 
share 

17.6p

Earnings  
£m 

24.7 

Shares  
million 

840.9 

2011 

Pence per 
share 

2.9p

(40.9)

(0.6)
(1.4)
8.8
(2.3)
–
(30.5)
1.1

52.1
–
(5.3)
8.5

139.6

853.8

8.9
(0.6)
(10.2)

–

137.7

853.8

(4.8)p

(0.1)p
(0.2)p
1.0p
(0.3)p
–
(3.6)p
0.2p

6.1p
0.0p
(0.6)p
1.1p

16.4p

1.0p
(0.1)p
(1.2)p

–

16.1p

(63.0) 

(9.1) 
8.7 
– 
(52.9) 
(40.4) 
193.4 
18.8 

42.3 
0.5 
3.5 
6.9 

133.4 

840.9 

7.6 
(1.9) 
– 

(0.5) 

138.6 

840.9 

(7.5)p

(1.1)p
1.1p
–
(6.3)p
(4.8)p
23.0p
2.3p

5.0p
0.1p
0.4p
0.8p

15.9p

0.9p
(0.2)p
–

(0.1)p

16.5p

EPRA earnings per share has been presented as recommended by EPRA which seeks to assist comparison between European property companies. 
However, we believe that our measure of underlying earnings per share is more appropriate than the EPRA measure in the context of our business as 
set out in note 18(c). 

144

Intu Properties plc 2012 Annual ReportOther information continued 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3. EPRA NAV 

Net assets 
£m 

Shares 
million 

NAV per share 
pence 

Net assets  
£m 

Shares 
million 

NAV per share 
pence 

2012 

2011 

NAV attributable to owners of  
Intu Properties plc 
Dilutive convertible bonds, share options and awards 
Diluted NAV 
Remove: 
Fair value of derivative financial instruments (net of tax) 
Deferred tax on investment and development properties
Non-controlling interest in respect of the above 
Add: 
Non-controlling interest recoverable balance 
not recognised 

EPRA NAV 
Fair value of derivative financial instruments (net of tax) 
Excess of fair value of debt over book value 
Deferred tax 
Non-controlling interest in respect of the above 

EPRA NNNAV 

2,977.0
–
2,977.0

481.8
8.7
(23.4)

71.3

3,515.4
(481.8)
(2.4)
(8.7)
(5.3)

3,017.2

857.1
39.6
896.7

896.7

896.7

347p

332p

54p
1p
(3)p

8p

392p
(54)p
–
(1)p
(1)p

336p

2,922.1 
3.8 
2,925.9 

520.9 
5.0 
(30.4) 

71.3 

3,492.7 
(520.9) 
141.0 
(5.0) 
(6.4) 

3,101.4 

853.5
40.3
893.8

893.8

893.8

342p

327p

58p
1p
(3)p

8p

391p
(58)p
16p
(1)p
(1)p

347p

The Group’s measure of NAV per share (diluted, adjusted) disclosed in note 19 is equal to the EPRA NAV presented above. The adjustment in respect 
of the non-controlling interest recoverable balance not recognised is due to historic accounting practices and is required, in our view, to give a more 
appropriate value of net assets attributable to equity owners of the Group. 

4. EPRA Net Initial Yield and ‘topped-up’ NIY 

Investment and development property 
Less developments 

Completed property portfolio 
Allowance for estimated purchasers costs 

Gross up completed property portfolio valuation 

Annualised cash passing rental income 
Property outgoings 
Annualised net rents 
Notional rent on expiration of rent free periods or other lease incentives 
Topped-up net annualised rent 

EPRA net initial yield 
EPRA ‘topped-up’ NIY 

EPRA net initial yield and ‘topped-up’ NIY by property is given in the Investment and development property section. 

5. EPRA Vacancy Rate 

EPRA Vacancy Rate 

2012
£m 

7,073
(7)

7,066
340

7,406

386
(19)
367
19
386

5.0%
5.2%

2011
£m 

6,960
(71)

6,889
328

7,217

385
(19)
366
16
382

5.1%
5.3%

2012
% 

1.9

2011
% 

2.4

EPRA Vacancy Rate is calculated as the ERV of vacant space divided by the ERV of the whole portfolio. EPRA vacancy rate by property is given in the 
Investment and development property section. 

145

Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial record 
2009 – 2012 

Net rental income 
Underlying earnings 
Underlying earnings per share 
Dividend per share 
Property revaluation (deficit)/surplus 

NAV per share (diluted, adjusted) 
Market value of investment and development property 
Net external debt 

Debt to assets ratio 
Interest cover 

Change in like-for-like net rental income 
Occupancy2 
Growth in footfall (like-for-like) 

20091 

£267m
£75m
15.1p
15.0p
£(535)m

339p
£4,631m
£2,522m

54.5%
1.41x

(3.4)%
98%
3%

2010 

£277m 
£97m 
15.4p 
15.0p 
£501m 

2011 

£364m 
£139m 
16.5p 
15.0p 
£63m 

2012 

£363m
£138m
16.1p
15.0p
£41m

390p 
£5,099m 
£2,437m 

391p 
£6,960m 
£3,374m 

392p
£7,073m
£3,504m

48.0% 
1.56x 

2.1% 
98% 
3% 

48.5% 
1.71x 

3.6% 
97% 
2% 

49.5%
1.69x

(2.7)%
96%
(1)%

Results prior to 2009 are not presented as they include the Capco business and so are not considered comparable. 

1  2009 figures are re-presented to remove the impact of the Capco business following the demerger in May 2010 and to present the C&C US business as 

held for sale. 

2  From 2010 occupancy is stated including the extension to St David’s completed in November 2009. 

146

Intu Properties plc 2012 Annual ReportOther information continued 
 
 
 
 
 
 
 
 
 
 
 
Management structure and advisers 

Intu Properties plc 
Chairman, Deputy Chairman and Executive Directors 
Patrick Burgess, Chairman 
John Whittaker, Deputy Chairman (Alternate – Steven Underwood) 
David Fischel, Chief Executive 
Matthew Roberts, Finance Director 
Non-Executive Directors 
John Abel 
Adèle Anderson 
Richard Gordon (Alternate – Raymond Fine) 
Andrew Huntley 
Louise Patten 
Rob Rowley (Senior Independent Director) 
Neil Sachdev 
Andrew Strang 
Executive Committee* 
Mike Butterworth, Chief Operating Officer 
Martin Ellis, Construction Director 
Hugh Ford, General Corporate Counsel 
Susan Marsden, Group Company Secretary 
Trevor Pereira, Commercial Director 
Peter Weir, Group Financial Controller 
Asset Management 
Jonathan Ainsley, Asset Management Director 
Martin Breeden, Asset Management Director 
Julian Wilkinson, Asset Management Director 
Operations 
Peter Beagley, Regional Centre Director 
Paul Lancaster, Regional Centre Director 
Gordon McKinnon, Regional Centre Director 
Roger Binks, Customer Experience Director 
Construction and Development 
Charles Forrester, Director of Project Management 
Julie Pears, Director of Development 
Retail and Leasing 
Joanne Skilton, Director of Retail and Leasing 
Group Treasury and Tax 
Daniel Shepherd, Acting Group Treasurer 
Gary Hoskins, Head of Tax 
Internal Audit 
Claire Combes, Head of Risk and Internal Audit 
Human Resources 
Bernie Kingsley, Human Resources Director 
Investor Relations 
Kate Bowyer, Head of Investor Relations 
Corporate Responsibility 
Alexander Nicoll, Director of Corporate Responsibility 
Information Systems 
Gian Fulgoni, Chief Information Systems Officer 
PR and Communications 
Amanda Campbell, Communications Director 
Corporate Finance 
Dushyant Sangar, Director of Corporate Finance 
intu.co.uk 
Karen Harris, Managing Director 
Registered Office 
40 Broadway, London SW1H 0BT 
Telephone 020 7887 4220 
Facsimile 020 7960 1333 
Registered Number 
3685527 
Website 
intugroup.co.uk 

*   Additional members of the Executive Committee are the Chief Executive 

(Chairman of the Committee) and the Finance Director. 

Centre Managers 

Braehead, Renfrew, Glasgow 
www.braehead.co.uk 
Peter Beagley 0141 885 1441 
Broadmarsh, Nottingham 
www.broadmarsh.uk.com 
Sarah Turnbull 0115 840 4555 
Chapelfield, Norwich 
www.chapelfield.co.uk 
Davina Tanner 01603 753344 
The Chimes, Uxbridge 
www.thechimes.uk.com 
Shelley Peppard 01895 819400 
Eldon Square, Newcastle 
www.eldon-square.co.uk 
Philip Steele 0191 261 1891 
The Glades, Bromley 
www.theglades.uk.com 
Howard Oldstein 020 8313 9292 
The Harlequin, Watford 
www.theharlequin.uk.com 
Michael Stevens 01923 250292 
Lakeside, Thurrock 
www.lakeside.uk.com 
Paul Lancaster 01708 869933 
The Mall, Cribbs Causeway, Bristol 
www.mallcribbs.com 
Jonathan Edwards 0117 915 5555 
Manchester Arndale 
www.manchesterarndale.com 
David Allinson 0161 833 9851 
Metrocentre, Gateshead 
www.metrocentre.uk.com 
Gavin Prior 0191 493 0200 
Potteries, Stoke-on-Trent 
www.potteries.uk.com 
Paul Francis 01782 289822 
St David’s, Cardiff 
www.stdavidscardiff.com 
Steven Madeley 029 2039 6041 
The Trafford Centre 
www.traffordcentre.co.uk 
Gordon McKinnon 0161 746 7777 
The Victoria Centre, Nottingham 
www.victoriacentre.uk.com 
Janine Bone 0115 912 1111 

Advisers 
Auditors 
PricewaterhouseCoopers LLP 
Chartered Accountants and Registered Auditors 
Solicitors 
Linklaters LLP 

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Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Glossary  

ABC1 customers 
Proportion of customers within UK social groups A, B and C1, defined as 
members of households whose chief earner’s occupation is professional, 
higher or intermediate management or supervisory. 

Annual property income 
The Group’s share of passing rent plus the external valuers’ estimate 
of annual excess turnover rent, additional rent in respect of unsettled 
rent reviews and sundry income such as that from car parks and 
mall commercialisation.  

Debt to assets ratio 
Net external debt divided by the market value of investment and 
development property. 

Diluted figures 
Reported amounts adjusted to include the effects of dilutive potential 
shares issuable under convertible bonds and employee incentive 
arrangements. 

Earnings per share 
Profit for the period attributable to owners of Intu divided by the 
weighted average number of shares in issue during the period. 

EPRA 
European Public Real Estate Association, the publisher of Best Practice 
Recommendations intended to make financial statements of public real 
estate companies in Europe clearer, more transparent and comparable. 

ERV (estimated rental value) 
The external valuers’ estimate of the Group’s share of the current 
annual market rent of all lettable space net of any non-recoverable 
charges, before bad debt provision and adjustments required under IFRS 
regarding tenant lease incentives. 

Exceptional items 
Exceptional items are those items that in the Directors’ view are 
required to be separately disclosed by virtue of their size or incidence to 
enable a full understanding of the Group’s financial performance.  

Headline rent ITZA 
Annual contracted rent per square foot after expiry of concessionary 
periods in terms of zone A. 

Interest cover 
Underlying operating profit excluding trading property related 
items divided by the net finance cost plus interest on convertible 
bonds recognised in equity excluding the change in fair value of 
derivatives, exceptional finance costs and amortisation of compound 
financial instruments. 

Interest rate swap 
A derivative financial instrument enabling parties to exchange interest 
rate obligations for a predetermined period. These are used by the 
Group to convert floating rate debt to fixed rates. 

IPD  
Investment Property Databank Ltd, producer of an independent 
benchmark of property returns.  

Like-for-like property 
Investment property which has been owned throughout both periods 
without significant capital expenditure in either period, so that income 
can be compared on a like-for-like basis. For the purposes of comparison 
of capital values, this will also include assets owned at the previous 
reporting period end but not throughout the prior period. 

Loan-to-value (‘LTV’) 
LTV is the ratio of attributable debt to the market value of an 
investment property.  

NAV per share (diluted, adjusted) 
NAV per share calculated on a diluted basis and adjusted to reflect 
any unrecognised surplus on trading properties (net of tax), to remove 
the fair value of derivatives (net of tax) and to remove deferred tax 
on investment and development property and other investments. 

Net asset value (‘NAV’) per share 
Net assets attributable to owners of Intu Properties plc divided by the 
number of ordinary shares in issue at the period end. 

Net external debt 
Net debt after removing the Metrocentre compound financial instrument. 

148

Intu Properties plc 2012 Annual ReportOther information continuedNet initial yield (‘EPRA’) 
Annualised net rent on investment property (after deduction of revenue 
costs such as head rent, running void, service charge after shortfalls, 
empty rates and merchant association contribution) expressed as a 
percentage of the gross market value before deduction of theoretical 
acquisition costs, consistent with EPRA’s net initial yield. 

Net rental income 
The Group’s share of net rents receivable as shown in the income 
statement, having taken due account of non-recoverable costs, bad 
debt provisions and adjustments to comply with IFRS including those 
regarding tenant lease incentives. 

Nominal equivalent yield 
Effective annual yield to a purchaser from the assets individually 
at market value after taking account of notional acquisition costs 
assuming rent is receivable annually in arrears, reflecting estimated 
rental values (‘ERV’) but disregarding potential changes in market rents. 

Occupancy 
The passing rent of let and under offer units expressed as a percentage 
of the passing rent of let and under offer units plus ERV of un-let units, 
excluding development and recently completed properties. Units let to 
tenants in administration and still trading are treated as let and those 
no longer trading are treated as un-let. 

Passing rent 
The Group’s share of contracted annual rents receivable at the balance 
sheet date. This takes no account of accounting adjustments made in 
respect of rent free periods or tenant incentives, the reclassification of 
certain lease payments as finance charges or any irrecoverable costs 
and expenses, and does not include excess turnover rent, additional 
rent in respect of unsettled rent reviews or sundry income such as 
from car parks etc. Contracted annual rents in respect of tenants in 
administration are excluded. 

Property Income Distribution (‘PID’) 
A dividend, generally subject to UK withholding tax at the basic rate 
of income tax, that a UK REIT is required to pay to its shareholders 
from its qualifying rental profits. Certain classes of shareholder 
may qualify to receive a PID gross, shareholders should refer to 
intugroup.co.uk for further information. The Group can also pay 
non-PID dividends which are not subject to UK withholding tax. 

Real Estate Investment Trust (‘REIT’) 
A tax regime which exempts from corporation tax the rental profits 
and capital gains of the REIT’s qualifying investment property activities. 
In the UK, the regime must be elected into and the REIT must meet 
certain ongoing qualifications, including the requirement to distribute 
at least 90 per cent of qualifying rental profits to shareholders. 
The Group elected for REIT status with effect from 1 January 2007. 

Scrip Dividend Scheme 
The Group offers shareholders the opportunity to participate in 
the Scrip Dividend Scheme. This enables participating shareholders 
to receive shares instead of cash when a Scrip Alternative is 
offered for a particular dividend. For more information, please visit 
intugroup.co.uk/investors/shareholders-bondholders/dividends 

Tenant (or lease) incentives 
Any incentives offered to occupiers to enter into a lease. Typically 
incentives are in the form of an initial rent free period and/or a cash 
contribution to fit-out the premises. Under IFRS the value of incentives 
granted to tenants is amortised through the income statement on a 
straight-line basis over the lease term. 

Topped-up NIY (‘EPRA’) 
Net initial yield adjusted for the expiration of rent free periods and other 
unexpired lease incentives. 

Total financial return 
The change in NAV per share (diluted, adjusted) plus dividends per share 
paid in the period expressed as a percentage of opening NAV per share 
(diluted, adjusted). 

Trading property 
Property held for trading purposes rather than to earn rentals or for 
capital appreciation and shown as current assets in the balance sheet. 

Underlying earnings per share (‘EPS’) 
Earnings per share adjusted to exclude valuation movements, 
exceptional items and related tax.  

Underlying figures 
Amounts described as underlying exclude valuation movements, 
exceptional items and related tax. 

Vacancy rate (‘EPRA’) 
The ERV of vacant space divided by total ERV. 

Yield shift 
A movement (usually expressed in basis points) in the yield of a 
property asset.

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Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverviewPID Special note 

The following applies to the PID element only of the 2012 final dividend: 

UK shareholders For those who are eligible for exemption from the 
20 per cent withholding tax and have not previously registered for 
exemption, an HM Revenue & Customs (‘HMRC’) Tax Exemption 
Declaration is available for download from the ‘Investors’ section of 
the Intu Group website (intugroup.co.uk), or on request to our UK 
registrars, Capita Registrars. Validly completed forms must be received 
by Capita Registrars no later than the Record Date, Friday 26 April 2013, 
otherwise the dividend will be paid after deduction of tax. 

South African and other non-UK shareholders South African 
shareholders may apply to HMRC after payment of the dividend for 
a refund of the difference between the 20 per cent withholding tax 
and the UK/South African double taxation treaty rate of 15 per cent. 
Other non-UK shareholders may be able to make similar claims. 
Refund application forms for all non-UK shareholders are available 
for download from the ‘Investors’ section of the Intu website 
(intugroup.co.uk), or on request to our SA registrars, Computershare, 
or HMRC. Refunds are not claimable from Intu Properties plc, the South 
African Revenue Service or other national authorities, only from the 
UK’s HMRC. 

Additional information on PIDs can be found at 
intugroup.co.uk/investors/shareholders-bondholders/real-estate-
investment-trust/ 

The above does not constitute advice and shareholders should seek 
their own professional guidance. Intu Properties plc does not accept 
liability for any loss suffered arising from reliance on the above. 

Dividends 

The Directors of Intu Properties plc have proposed a final dividend per 
ordinary share (ISIN GB0006834344) of 10.0 pence (2011 – 10.0 pence) 
to bring the total dividend per ordinary share for the year to 15.0 pence 
(2011 – 15.0 pence). 

This dividend may be partly paid as a Property Income Distribution 
(‘PID’) and partly paid as a non-PID. The PID element will be subject 
to deduction of a 20 per cent withholding tax unless exemptions 
apply (please refer to the Special note below). Any non-PID element 
will be treated as an ordinary UK company dividend. Should the 
Directors decide to offer a Scrip alternative to the 2012 final dividend, 
shareholders will be advised no later than Friday, 5 April 2013. The 
Board may decide to offer a scrip dividend where those opting for a cash 
dividend would receive 10.0 pence as a PID, subject to UK withholding 
tax, and those opting for a scrip dividend would receive shares based 
on 8.5 pence being paid as a PID, subject to UK withholding tax, and 
1.5 pence being paid as an ordinary dividend. Alternatively, the Board 
may instead decide to pay a cash-only dividend which would have 
9.0 pence being paid as a PID, subject to UK withholding tax, and 
1.0 pence being paid as an ordinary dividend. For South African 
shareholders, non-PID cash dividends may be subject to deduction 
of South African Dividends Tax at 15 per cent. 

The following are the salient dates for the payment of the proposed 
final dividend. 

Thursday 11 April 2013 

Sterling/Rand exchange rate struck 

Friday 12 April 2013 

Sterling/Rand exchange rate and dividend amount in SA 
currency announced 

Monday 22 April 2013 

Ordinary shares listed ex-dividend on the Johannesburg Stock 
Exchange, Johannesburg 

Wednesday 24 April 2013 

Ordinary shares listed ex-dividend on the London Stock Exchange 

Friday 26 April 2013 

Record date for 2012 final dividend in London and Johannesburg  
UK Shareholders only: Last date for receipt of Tax Exemption forms to permit dividends to be paid gross 

Tuesday 4 June 2013 

Dividend payment day for shareholders 

South African shareholders should note that, in accordance with the 
requirements of Strate, the last day to trade cum-dividend will be Friday 
19 April 2013 and that no dematerialisation or rematerialisation of 
shares will be possible from Monday 22 April 2013 to Friday 26 April 
2013 inclusive. No transfers between the UK and South African 
registers may take place from Thursday 11 April 2013 to Sunday 
28 April 2013 inclusive.  

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Intu Properties plc 2012 Annual ReportOther information continued 
Shareholder information 

Registrars 

All enquiries concerning shares or shareholdings, including notification 
of change of address, queries regarding loss of a share certificate and 
dividend payments should be addressed to: 

For shareholders registered in the UK 

Capita Registrars  
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU 
Telephone (within UK) 0871 664 0300 (calls cost 10p per minute plus 
network extras; lines are open 8.30 am – 5.30 pm Monday – Friday) 
Telephone (outside UK) +44 20 8639 3399 
Facsimile +44 20 8639 2342 
Email: ssd@capitaregistrars.com 
www.capitashareportal.com 

For shareholders registered in South Africa 

Computershare Investor Services (Pty) Ltd 
70 Marshall Street, Johannesburg 2001 
South Africa 
Postal address: 
PO Box 61051 
Marshalltown 2107, South Africa 
Telephone +27 11 370 5000 
Facsimile +27 11 688 5221 
Email: web.queries@computershare.co.za 
www.computershare.com 

Payment of dividends 

Shareholders who wish to have their dividends paid directly into a bank 
or building society account should complete a mandate form available 
from the appropriate registrars.  

Share price information 

The latest information on the Intu Properties plc share price is available 
on the website intugroup.co.uk 

Web-based enquiry service 
for shareholders  

Shareholders registered in the UK can go to www.capitashareportal.com 
to obtain details of their shareholdings and dividends. The shareholder’s 
surname, Investor Code (found on any correspondence from registrars) 
and postcode are required to use this service. Shareholders may also 
use this service to amend or change their address and dividend 
mandate details. 

Shareholders registered in South Africa can go to 
www.computershare.com/investor to obtain details of their 
shareholdings. Shareholders will need to follow a registration process in 
order to access such information. Unfortunately, due to South African 
legal requirements, shareholders may not update records, but will be 
able to view their entire holding of shares globally. Please note that the 
Computershare company code for Intu Properties plc is ITUZ. 

Share dealing 

Existing UK shareholders may trade Intu Properties plc shares through 
Capita Share Dealing Services who provide an easy to use, real-time 
online, telephone and postal dealing service.  

Contact details are: 

www.capitadeal.com  
Telephone (within UK) 0871 664 0364 (calls cost 10p per minute plus 
network extras; lines are open 8.00 am – 4.30 pm Monday – Friday) 
(Ireland) Lo-call 1 890 946 375  
(outside UK) +44 20 3367 2686 

Existing South African shareholders whose shares are held in electronic 
format through Computershare CSDP may trade Intu Properties plc 
shares through Computershare’s low cost telephone share dealing 
service on 0861 100 950 (SA calls only). 

Electronic communication 

The Company supplies information such as the Annual and Interim 
Report via its website to shareholders who have consented to such 
communication. Shareholders will be notified by email or post when 
new information is available on the website. 

Shareholders can at any time revoke a previous instruction in order 
to receive hard copies of shareholder information. 

UK shareholders may register to receive email alerts by logging on 
to the website of the UK Registrars (www.capitashareportal.com) 
and following the instructions given to register an email address. 
SA shareholders may register to receive email alerts by written 
instruction to the SA Registrar, Computershare, sent either by email 
(ecomms@computershare.co.za) or by facsimile (+27 11 688 5248). 
Once registered, shareholders are sent a ‘Notice of Availability’ 
email highlighting that the Annual Report, Interim Report or other 
information is available for viewing on the website. 

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Intu Properties plc 2012 Annual ReportBusiness model and strategyBusiness reviewFinancial reviewCorporate responsibilityGovernanceAccountsOther informationOverview 
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This report contains ‘forward-looking statements’ regarding the belief or current expectations of Intu Properties plc, its Directors and other members of its 
senior management about Intu Properties plc’s businesses, financial performance and results of operations. These forward-looking statements are not 
guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other 
factors, many of which are outside the control of Intu Properties plc and are difficult to predict, that may cause actual results, performance or developments to 
differ materially from any future results, performance or developments expressed or implied by the forward-looking statements. These forward-looking 
statements speak only as at the date of this report. Except as required by applicable law, Intu Properties plc makes no representation or warranty in relation to 
them and expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect any change in Intu Properties plc’s 
expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 

Any information contained in this report on the price at which shares or other securities in Intu Properties plc have been bought or sold in the past, or on the 
yield on such shares or other securities, should not be relied upon as a guide to future performance.

152

Intu Properties plc 2012 Annual Report 
 
 
 
 
 
For further information go online
intugroup.co.uk

Overview
01   Creating great retail experiences
08   2012 Highlights
10   Chairman’s statement
13  Governance and remuneration overview

Business model and strategy
16   Business model*
18   Strategy*
20   Key performance indicators*
22  Our people
26   Key risks and uncertainties*
28   Top properties

Business review
32   Market review*
34   Valuations*
36   Operating review*

Financial review
44   Financial review*

Corporate responsibility
52   Corporate responsibility*

Governance
60   Board of Directors
62   Executive management
63  Chairman’s introduction
64   Corporate governance report
74   Directors’ remuneration report
89   Directors’ report*
92   Statement of Directors’ responsibilities

Accounts
94  
Independent auditors’ report
95   Consolidated income statement
96   Consolidated statement of comprehensive income
97   Balance sheets
98   Statements of changes in equity
101   Statements of cash flows
102   Notes to the accounts

Other information
140   Investment and development property
142   Financial covenants
143   Underlying profit statement
144   EPRA performance measures
146   Financial record
147   Management structure and advisers
148   Glossary
150   Dividends
151   Shareholder information

 *  These sections of the report include items required to be stated 
in accordance with Section 417 of the Companies Act 2006 – 
Business Review.

On 15 February 2013 the Company changed its name from Capital Shopping Centres 
Group PLC to Intu Properties plc. Throughout this document the Company is referred  
to as Intu Properties plc.

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intugroup.co.uk

Intu Properties plc 
40 Broadway, London SW1H 0BT

Telling our brand new story
Annual Report 2012